C-181/73

The BELGIAN State, in the person of the Minister of Economic Affairs, Brussels,

on the interpretation of certain provisions of the Agreement of Association between the European Economic Community and Greece signed at Athens on 9 July 1961 and of Protocol No 14 mentioned in the final act of that Agreement, and on the validity of the countervailing charge imposed by Article 9 (3) of Regulation No 816/70 of the Council dated 28 April 1970, as applied to Greek wine imported into Belgium and the Grand Duchy of Luxembourg,

THE COURT

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

Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

Protocol No 14, Paragraph 2 1. Prior to the coming into force of Regulation No 816/70 of the Council 'The Kingdom of Belgium, the Grand dated 28 April 1970 (OJ 1970, L 99) Duchy of Luxembourg and the Kingdom 'laying down additional provisions for of the Netherlands shall apply to the common organization of the market imports from Greece the treatment in wine' imports of Greek wine into accorded to imports from Germany, Benelux territory were not subject to any France and Italy.' customs duties or to any quantitative restrictions. Following the conclusions of Article 37 (2) (a) the 'Agreement of Association between For agricultural products not included the European Economic Community and in the list contained in Annex III and by Greece' signed at Athens on 9 July 1961 derogation from Articles 13, 14, 15, 17, (OJ 1963 No 26) (hereinafter called the 25, 26 and 27 of the Agreement, the Athens Agreement) Belgium, Luxem­ Contracting Parties: bourg and the Netherlands undertook to apply to imports from Greece the (a) shall refrain from introducing treatment accorded to imports from between themselves new customs Germany, France and Italy, which made duties on imports or exports or no provision for the imposition of charges having equivalent effect and customs duties. from increasing those which they already apply in their trade with On 1 June 1970 Regulation No 816/70 each other at the date of entry into came into force in the Community. force of the Agreement.' Article 9 provides in particular for: (i) the fixing of a reference price for red Article 41 (1) wine and a reference price for white wine: 'In so far as progressive abolition of customs duties and quantitative (ii) the application where the free-at- restrictions between the Contracting frontier price for a wine, plus Parties may result in prices likely to customs duties, is lower than the jeopardize the attainment of the reference price, of a countervailing objectives set out in Article 39 of the charge equal to the difference Treaty establishing the Community, the between these two prices. Community and Greece may. from the 'Detailed rules for establishing free-at- date of the introduction of the common frontier offer prices and fixing the agricultural policy in the case of the

Community, and from the entry into after this date (1 June 1970). This force of this Agreement in the case of request was based on a reference to the Greece, apply to particular products a Athens Agreement, particularly Protocol system of minimum prices below which No 14 mentioned in the final act of that imports may be either agreement 'concerning exports from Greece of wines of fresh grapes and grape — temporarily suspended or reduced; or must with fermentation arrested by the addition of alcohol', and also on the — allowed, but subject to the condition (company's) claim that the treatment that they are made at a price higher envisaged in these documents for than the minimum price for the imports of Greek wine into Benelux product concerned. territory did not fall under Article 9 of Regulation No 816/70. In the latter case the minimum prices shall not include customs duties. The Commission, however, by letter dated 9 August 1971, replied that the Article 43 desired exemption was not justified either in view of the common 'Where a product is subject to a market organization established in the wine organization or to internal rules having market, or taking into account the equivalent effect, or where a product is Athens Agreement. This position was directly or indirectly affected by such a confirmed by letter dated 27 November market organization for other products, 1971. and where the resulting disparity in the On 13 December 1971, Haegeman price of the raw materials used has a commenced a direct action (Case 96/71) damaging effect on the market of one or more Member States or of the before the Court of Justice applying for the annulment of this refusal and also Community, on the one hand, or of for damages to compensate for the loss Greece on the other, a countervailing incurred. By judgment dated 25 charge may be applied to imports of that October 1972 (Rec. 1972, p. 1005) the product by the Contracting Party Court dismissed this application. The concerned, in the absence of a Court held firstly that the request for countervailing charge on exports. reimbursement of the disputed charge The amount of and the rules concerning was a matter to be decided by the this charge shall be determined by the competent national authorities, and Council of Association. secondly that the question of the Until the decision of the Council of Commission's possible liability was in Association takes effect the Contracting the context bound up with that of the Parties may determine the amount of legality of levying the charge.

Agreement. When this action was Haegeman, assisted by Jacques Putzeys, brought before the Tribunal de première avocat at the Cour d'Appel of Brussels, instance of Brussels, the latter court the Belgian State, represented by the decided, by judgment dated 17 October Minister for Economic Affairs, assisted 1973, to suspend the proceedings and to by Adolf Houtekier, avocat at the Cour refer to the Court of Justice, under de Cassation of Belgium, and the Article 177 of the EEC Treaty, the Commission of the European Communi­ following questions: ties, represented by its Legal Adviser, Bernard Paulin, acting as agent, '1. What interpretation is to be given to submitted observations under Article 20 the word "treatment" in paragraph 2 of the EEC Statute of the Court of of Protocol No 14 annexed to the Justice. Agreement establishing an Associ­ Upon hearing the report of the ation between the European Econo­ mic Community and Greece? Judge-Rapporteur, and the opinion of the Advocate-General, the Court decided '2. Is the countervailing charge imposed to open the oral procedure without any by the Commission of the European preparatory inquiry. Communities on Greek wines imported into Belgium and the Grand Duchy of Luxembourg a duty charge II — Observations submit­ having equivalent effect within the ted under Article 20 of meaning of Article 37 (2) of the said the EEC Statute of the Agreement of Association?' Court 3. Under Article 43 of the same Agreement of Association, is the A — Written observations submitted by Commission of the European Haegeman Communities empowered to deter­ mine on its own, i.e., without Haegeman recalls, regarding the first reference to the Council of question, that one of the essential Association, the amount of the objectives of the Athens Agreement is countervailing charge to be imposed the reservation for Greece of preferential on imports of Greek wine into the treatment by comparison with other territory of the EEC, and the way in third States in dealings with Member which it is to be collected? States. It is with this objective in view '4. Assuming that the conditions for that Paragraph 2 of Protocol No 14 applying Article 41 of the Agreement accords to imports of Greek wines into of Association are satisfied, is it the Benelux countries the same lawful for the Commission of the treatment as is applied by these countries European Communities to put the to imports of wines from Germany, Italy protective measures for which it and France. provides into operation otherwise These latter imports enjoy totally than by means of a system of unrestricted treatment; so imports of minimum prices, and, more wines from Greece also should not be particularly, by a system of subject to tariffs and quotas. It is countervailing charges levied by the erroneous (so it is claimed) to make a Community?' distinction in this connexion between the expression, treatment accorded to 2. The judgment making the reference imports, on the one hand, and treatment reached the Court on 7 November 1973. as regards tariffs and quotas on the The Société de personnes à responsabil­ other. The treatment accorded to ité limitée R. & V. Haegeman, represented imports of Greek wines into the Member by its managing director, Mr Victor States consisting solely in restrictions by

way of tariffs and quotas, such a imposed within the framework of the distinction is meaningless in the context. common agricultural policy from being Further, it makes Paragraph 2 of considered as charges having equivalent Protocol No 14 quite meaningless in the effect. In this context, it must not be case of Belgium, which does not apply overlooked that in cases like the present customs duties or quotas to imports of where the Community is bound by an German, Italian and French wines. Association Agreement imposing a It is possible, on the other hand, to standstill and forbidding any new distinguish between the treatment customs duties or charges having accorded to Greek wines in process of equivalent effect, the question of the importation and the treatment accorded nature of a countervailing charge is to be them in process of movement in the decided not according to Community territories of the Member States. But it is law, but according to international law. The solution in these cases must be quite evident that the principle behind Protocol No 14 as defined above applies reached (Haegeman argues) without to the treatment of imports only. Since losing sight of the role played by the countervailing charge is an element customs duties in international affairs, in the treatment of imports, the levying which is always to protect the national of it infringes Paragraph 2 of the said or Community market.

Since Greek Haegeman maintains that since the wines enter the Benelux countries at expression countervailing charge has no prices lower than the reference price, the fixed legal content, it must be defined in effects of the countervailing charge in each concrete situation by reference to the Community are not the same in the purposes for which and results with every Member State. which it has actually been imposed. In Haegeman suggests the following answer the context of Article 37 (2) (a) of the

HAEGEMAN v BELGIUM .

of Article 43 of the Athens Agreement the free-at-frontier offer price of Greek the countervailing charge is envisaged as wines and the reference price of a measure giving protection to one Community wine, while minimum prices contracting party and for that reason are necessarily fixed prices. Secondly, the causing repercussions in the markets of countervailing charge, being levied by the other contracting parties. This is the Member States for the Community precisely the reason why the authors of account, is of no benefit to Greece. For the Agreement laid down compulsory this reason, the application of a procedure for determining the amount of countervailing charge instead of a system such a charge and the way in which it is of minimum prices gives the Community to be collected. Under this procedure, a twofold advantage to the detriment of only the Council of Association is Greece, and thus upsets the balance empowered to make decisions, since the between the parties, contrary to the possibility mentioned in the last spirit and the letter of the Athens paragraph of Article 43 is only relevant Agreement. Haegeman suggests that the to a special situation characterized by fourth question should, therefore, be urgency and calling for the adoption of answered as follows: provisional measures. In the present 'The provision made in Article 41 for an case, however, it is certain that the exceptional case of unilateral protection countervailing charge was determined for the Communities can only be put unilaterally by the Community, without into operation by means of a system of even consulting the Council of minimum prices and not by a system of Association. The following answer to the countervailing charges.' third question is accordingly suggested:

JUDGMENT OF 30. 4. 1974 — CASE 181/73

Article 43 of the Agreement has been is covered by Protocol No 12 to the applied. Agreement quoted above. Further, the As regards the first question, the Belgian conditions for the application of Article State considers that the word 'treatment', 14 were in the circumstances never

'The levy system envisaged within the framework of the common agricultural C — Observations submitted by the policy constitutes a measure specific to Commission of the European that policy which in the case of its Communities application by either Party is not to be considered as a charge having equivalent The Commission begins by summarizing effect to customs duties within the the essential outlines of the legal meaning of Articles 12 and 37 of the treatment accorded to imports of wines Agreement of Association.' from Greece by the Member States of The very structure of this charge, the the Community as originally constituted, purpose with which and the way in before and after the coming into force of which it is applied all go to show that it Regulation No 816/70 (1 June 1970). is a variable tax with the typical Prior to 1 June 1970, the system in characteristics of a levy. question, consisting of customs duties Regarding the third question, the Belgian and quotas, had varied considerably State is of the opinion that the levying of according to which Member State was the countervailing charge does not fall the importer and whether it was one of under Article 43 of the Athens the Benelux countries. Agreement. The imposition of this The coming into force of Regulation No charge, which is in the nature of a levy, 816/70 had not affected this system's

HAEGEMAN v BELGIUM

It is only after these analogous to that found in the common questions have been settled that the organization of other markets, prohib Belgian judge would be in a position to ition of charges having equivalent effect resolve the problem facing him. The and of quantitative restrictions, as well essential question he should have as the fixing of a reference price. The addressed to the Court is: prohibition of charges having equivalent 'Whether Regulation No 816/70 — in so effect and of quantitative restrictions has far as it provides for levying been of equal benefit to Greek wine. countervailing charges in respect of Further, since every country which is not Greece also — is invalid as contrary to a Member of the Community is a third Articles 37 (2), 41 and 43 of the Athens country, and the Athens Agreement, far Agreement and also to Paragraph 2 of from forbidding it, gives express Protocol 14 annexed thereto. permission, it appeared resonable (in the Passing finally to the examination of the view of the Commission) to extend the substance of the question asked, the system of reference prices to Greece as to Commission, as a preliminary, points out other third countries. that, as regards agriculture, the The levying of a countervailing charge programme envisaged in Articles 33 to under the conditions laid down in Article 36 of the Athens Agreement has been 9 is closely bound up with this system. It practically a dead letter, the political does not affect the special treatment as situation in Greece, since 21 April 1967, regards tariffs from which Greek wine having led the Community to limit the continues to benefit. Whereas in Benelux application of the Agreement to what is these imports have only to pay a strictly necessary. For this reason the

The theory that the manner in which they have been according to which the word 'treatment' formulated is not such as to enable the has a much wider meaning covering the referring judge to reach a solution of the totality of measures affecting these case. It is of equal and even paramount imports, produces absurd results.

Supposing that Paragraph 2 of Protocol After drawing attention to the fact that 14 is intended to oblige the Benelux Greece itself apparently shares the countries to accord Greek wines the Community's position, concerning both same treatment which they must grant to the concept of the levy and its legality French, German and Italian wines under under the Athens Agreement (Decree Community Regulations, it would be Law No 105, Official Journal of Greece necessary to conclude that the purpose No 145, 22 August 1965), the and effect of the Protocol was to extend Commission concludes by suggesting the to the production of Greek wines, not following answers to the first two only the provisions inherent in the Questions: common organization of the market, but

Agreement. Further, even supposing that the The reply to these questions should disputed countervailing charge can in the accordingly be as follows: abstract be equated with a charge having '3. The Community is only empowered equivalent effect, this equation is to determine the amount of the excluded in the context both by the charge referred to in Article 43 of the wording and by the intention of the Athens Agreement and the way in authors of the Athens Agreement. For all which it is collected provisionally these reasons, there are good grounds to and while awaiting a decision of the conclude that this charge is in the nature Council of Association.'

HAEGEMAN v BELGIUM

Agreement cannot be put into effect should at the same time make it clear to by a system of countervailing the court of reference that its reply, charges.' particularly to the third and fourth questions, in no way implies that This answer, however, does not put an Regulation No 816/70, in so far as it end to the problem facing the Belgian provides for the levying of countervail­ court. It would be quite wrong to ing charges on Greek wines also, is deduce from its negative form that the invalid. countervailing charge levied under Regulation No 816/70 is contrary to Articles 41 and 43 of the Athens Agreement and that this Regulation is III — Oral procedure accordingly invalid. In deciding upon the disputed measure the Community Haegeman, the Belgian State and the institutions never at any point relied Commission of the European Communi­ upon the said Articles, which envisage ties presented their oral observations at clearly defined conditions, quite different from the facts of the present situation. the hearing on 12 March 1974.

The Commission considers that when The Advocate-General delivered his replying to these questions the Court opinion on 4 April 1974.

Law

1 By judgment dated 17 October 1973, registered at the Court of Justice on 7 November 1973, the Tribunal de premiere instance of Brussels, under Article 177 of the EEC Treaty, referred preliminary questions on the interpretation of Article 9 (3) of Regulation No 816/70 of the Council dated 28 April 1970 (OJ 1970, L 99) and of certain provisions of the 'Agreement creating an Association between the European Economic Community and Greece', concluded in virtue of the Council's decision dated 25 September 1961 and published in the Official Journal dated 18 February 1963 (p. 293/63), hereinafter called the Athens Agreement.

7 The first question asks for a definition of the exact content and scope of the word 'treatment' occurring in Paragraph 2 of Protocol No 14 annexed to the Athens Agreement.

8 It emerges from the pleadings that the essential problem is whether the 'treatment' in this paragraph relates only to customs duties and quotas or to the general system under which Greek wines are imported into the Benelux countries.

9 Paragraph 2 of Protocol No 14 provides that:

'The Kingdom of Belgium, the Grand Duchy of Luxembourg and the Kingdom of the Netherlands shall apply to imports from Greece the treatment accorded to imports from Germany, France and Italy.'

10 To interpret this provision it is necessary to examine it in the light of the general structure both of the Athens Agreement, of which it forms part, and of the totality of the provisions contained in the Protocol itself.

11 By the terms of Article 6 of the said Agreement, the Association established between the Community and Greece 'shall be based on a customs union which, save as otherwise provided in the Agreement, shall cover all trade in goods and shall involve the prohibition between Member States of the Community and Greece of customs duties on imports and exports and of all charges having equivalent effect, and the adoption by Greece of the Common Customs Tariff of the Community in its relations with third countries.'

16 Further, in the case of agricultural products, Protocol No 12 annexed to this Agreement provides for the eventuality of these becoming subject to the levy system envisaged within the framework of the common agricultural policy.

17 It appears from these arrangements that the object of the Athens Agreement is the achievement of union, with three reservations: the time limits provided under the Agreement, the special advantages in the field of tariffs and quotas secured for Greek exports of certain agricultural products, and the freedom guaranteed to the Community by Protocol No 12 to decide the necessary measures for bringing the common agricultural policy into operation.

18 Since Protocol No 14 provides for the extension to Greek wine exports of the concessions granted, or which might be granted, by the Member States in their trade with each other, it properly belongs among these arrangements.

19 For this reason alone it is clear that the subject matter of Paragraph 2 of this Protocol is solely concerned with the customs duties and quotas applicable to Greek wine exports.

20 Further, this paragraph occurs in a provision which, in the case of exports of Greek wines into Germany, France and Italy, deals exclusively with questions of tariffs and quotas.

21 It must therefore be concluded that the word 'treatment' in Paragraph 2 of Protocol No 14 annexed to the Agreement creating an Association between the

26 Such a charge constitutes a levy inseparable from the establishment of a common organization of the market in wine.

27 If this charge fails to fulfil its protective purpose in the case of imports of Greek wines into the Benelux countries, this does not affect its nature in law, but is due solely to the privileged character of the treatment secured for these imports.

28 The said levy falls under the measures adopted within the framework of the common agricultural policy, in particular under the additional provisions for the common organization of the market in wine laid down by Regulation No 816/70.

29 The first paragraph of Protocol No 12 annexed to the Athens Agreement reserves freedom for the Community by providing that

HAEGEMAN v BELGIUM

'the levy system envisaged within the framework of the common agricultural policy constitutes a measure specific to that policy which in the case of its application by either Party is not to be considered as a charge having equivalent effect to customs duties within the meaning of Articles 12 and 37 of the Agreement of Association.'

34 It appears from these provisions that the measures laid down therein have the sole object of coping with difficulties due to abnormal market situations.

35 The disputed countervailing charge, on the other hand, is a measure for stabilizing imports, and forms an essential part of the common organization of the market in wine.

JUDGMENT OF 30. 4. 1974 — CASE 181/73

36 Articles 41 and 43 of the Agreement therefore having no bearing on the application of this charge, the questions relating to their interpretation are in the circumstances irrelevant.

Costs

The costs incurred by the Belgian State and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

3. Articles 41 and 43 of the Agreement of Association between the European Economic Community and Greece have no bearing on the

HAEGEMAN v BELGIUM

application of the countervailing charge imposed by Article 9 (3) of Regulation No 816/70.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Pescatore Kutscher Ó Dálaigh Mackenzie Stuart

Delivered in open court in Luxembourg on 30 April 1974.