C-14/74

1. EEC Treaty — Products originating in the German Democratic Republic — Free circulation in the Federal Republic of Germany — Not Community products (EEC Treaty, Protocol on German Internal Trade)

2. Agriculture — Common organization of the markets — Agricultural producers — Guarantee of income — Price mechanism — Limitation to Community products (EEC Treaty, Article 40)

1. The dispensation granted by the customs clearance, they are not Protocol on German Internal Trade regarded by reason of this as having annexed to the Treaty does not have an origin in the Federal Republic of the result of making the German Germany. Democratic Republic part of the Community, but only that a special system applies to it as a territory 2. The organization of the agricultural which is not part of the Community. markets has established price The importation of goods into the mechanisms intended to give Federal Republic of Germany under agricultural producers certain guaran­ the Protocol cannot therefore be tees of income. The benefit of these regarded as importation from a third measures is limited, in general, to country, since it is German internal products of the Community, that is to trade. Although such goods are say of those countries which entitled to circulate freely in the contribute to the financing of the Federal Republic of Germany without common agricultural policy.

In Case 14/74

Reference to the Court under Article 177 of the EEC Treaty by the Finanz­ gericht Hamburg for a preliminary ruling in the action pending before that court between

1 — Language of the Case: German.

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

Advocate-General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The order for reference and the written I — Facts and procedure observations submitted pursuant to Article 20 of the Protocol on the Statute The common organization of the market of the Court of Justice of the EEC may in pigmeat was created by Regulation be summarized as follows: (EEC) No 121/67 of the Council of 13

June 1967 (OJ L 117 of 19 June 1967, p. Moreover, Article 6 (1) of Regulation 2283) which implements a system for (EEC) No 1041/67 of the Commission of trade with third countries according to 21 December 1967, on detailed rules for which, on the one hand, 'a levy . . . shall the application of export refunds on be charged on imports into the products subject to a single price system Community of the products (subject to (OJ L 314 of 23 December 1967, p. 9) the common organization of the provides that 'a refund shall be granted market)' (Article 8) and, on the other only in respect of products in free hand, 'to the extent necessary to enable circulation within the Community'. the (said) products to be exported on the Finally, the German Government basis of quotations or prices for those products on the world market, the adopted, on 24 January 1968, a regulation concerning EEC export difference between those quotations or prices and prices within the Community refunds (Bundesanzeiger No 18 of 26

imported. The defendant refunded a organization of the market) . . . imported from third countries and re-exported to total of DM 16 784-62, corresponding to third countries, unless the exporter the consignments exported on 4 July 1969, but did not reply to the claim, proves: made subsequently, for a refund for the — that the product to be exported and consignment exported on 27 June 1969. the product previously imported are After an investigation, by Decision of 27

means . . . products derived from live animals raised therein'. By Decision of 20 January 1972 the

The latter brought an action against this The order for reference was registered at the Court on 1 March 1974. The Decision, on 23 February 1972, before the Finanzgericht Hamburg, which Commission of the European Commu­ decided to suspend the proceedings and nities, represented by its Legal Adviser P. to refer to the Court of Justice the Kalbe, the Government of the Federal following preliminary question: Republic of Germany represented by M. Seidel and the plaintiff, represented by 'Are Article 6 (1) or Article 7 of Advocates Wendt, Wiech and Heyn, of Regulation (EEC) No 177/67 and Article the Hamburg Bar, submitted written 4 (1) and (2) (d) of Regulation (EEC) No observations. 802/68 in conjunction with the "Protocol on German Internal Trade Having heard the report of the and connected problems" to be Judge-Rapporteur and the opinion of the Advocate-General, the Court decided to interpreted as meaning that products open the procedure without any within the meaning of Article 1 (1) of preparatory inquiry. Regulation (EEC) No 121/67, which have been brought from the German Democratic Republic into the Federal Republic of Germany under the terms of II — Observations the agreement on inter-zonal trade, are submitted pursuant to eligible for export refunds on export Article 20 of the from the Federal Republic to a third Protocol on the Sta­ country?' tute of the Court of It appears from the order for reference Justice of the EEC that the Finanzgericht is questioning the application of the abovementioned (a) Observations submitted by the provisions to products from the German plaintiff Democratic Republic. It recalls that in the Protocol of 25 March 1957 on The plaintiff notes, firstly, that there can German Internal Trade and connected be no question in the present case of problems (Bundesgesetzblatt 1957, II, p. applying Article 7 of Regulation No 984), annexed to the EEC Treaty, the 177/67, since the Protocol on German Member States agreed that 'since trade Internal Trade, which is an integral part between the German territories subject of the EEC Treaty and therefore takes to the Basic Law for the Federal precedence over Community Regu­ Republic of Germany and the German lations, expressly provides that the territories in which the Basic Law does application of the said Treaty does not not apply is a part of German internal require the Federal Republic of Germany trade, the application of this Treaty in to adapt its system of trade with the Germany requires no change in the German Democratic Republic to that of treatment currently accorded this trade'. its trade with third countries. It therefore Since the application of the EEC Treaty transpires that German internal trade can therefore have no effect on German forms part of the internal trade of the internal trade, the concepts 'community Federal Republic of Germany, that the origin' and 'country' should be German Democratic Republic is not a interpreted to mean that the German third country within the meaning of the Democratic Republic is included within above-mentioned Article 7 and that the the Community. If not, it should be bringing of goods into the Federal made known whether the goods in Republic of Germany from the German question fall within the field of Democratic Republic does not constitute

importation into the Federal Republic of confirmed in practice. The bringing of a Germany. It is for this reason that product into the Federal Republic of neither the Common Customs Tariff nor Germany from the German Democratic the levies are applied. Republic does not give rise to the According to the plaintiff, Article 6 (1) imposition of any levy, is not subject to of Regulation No 177/67 is directly any import duty and is effected on the applicable and accordingly the goods in basis of Community prices. question must be considered to have Accordingly, if in all respects such a originated within the Federal Republic product must be considered to be a

The question which arises Germany from the German Democratic therefore is whether the applicability of Republic within the context of Article 6 (1) of Regulation No 177/67 to inter-zonal trade must be treated as the goods in question is in conformity goods of Community origin. Article 4 of with the objectives of the system for Regulation No 802/68 must moreover be refunds on exports to third countries, interpreted in the light of paragraph (1) and for what reason this provision takes of the Protocol and, since this is a matter Community origin to be a decisive of internal trade, goods which are factor. In fact Article 6 (1) is not marketed in this context cannot have concerned to regulate the market in a originated in a country other than that particular way, independently of Article in which they are put upon the market. 7; its sole object is to guarantee the The relevance of this view is supported application of the principle that no by the fact that the German Democratic refund shall be granted for products Republic does not form part of the imported from third countries.

customs territory. In fact the pigmeat is based upon the price of feed organization of the Community as a grain within the Community and customs union means that, with regard because, if the pigs have not been raised to the free circulation of goods within within the Community, the feed grain the Community, a distinction is made necessary for raising them has not been only between goods which originate bought at Community prices. In effect within the Member States and those the danger of speculative transactions is which originate within third countries avoided in inter-zonal trading relations (Article 9 (2) in conjunction with Article with goods subject to a common 10 (1) of the EEC Treaty). organization of the market, since the The above considerations are moreover West German buyer can buy in the

There is therefore no question of Regulation No 177/67 should be admitting, by a legal fiction, that goods respected. These criteria are explained imported from the German Democratic by the concern to guarantee that Republic into the Federal Republic of Community products should find an Germany originated within the latter outlet into the world market, which country, which would result in the would not normally be open to them. agricultural production of the German Since the imported pigmeat makes no contribution to an increase in the income Democratic Republic benefitting from the marketing guarantee of the common of Community producers, it is not agricultural policy when it has made no subject to a price guarantee and is not contribution towards the financing of supported by means of export refunds. that policy. At the very most, the levies charged on importation might be reimbursed. If goods exported from the German Democratic Republic into the Federal The plaintiff cannot show proof, as Republic of Germany are in fact put into required in Article 6, 'that the products free circulation within the Community, are of Community origin', since Article 4 that is because the Federal Republic of of Regulation No 802/68 lays down that Germany does not have to comply with only 'goods wholly obtained or the formalities regarding importation produced in one country shall be and the levying of customs duties and considered as originating in that charges having equivalent effect laid country', from which it may be deduced down for products coming from third that only goods obtained or produced in

The Court is asked whether the aforementioned provisions are 'to be interpreted as meaning that products within the meaning of Articles 1 (1) of Regulation No 121/67/EEC, which have been brought from the German Democratic Republic into the Federal Republic of Germany under the terms of the agreement on inter-zonal trade, are eligible for export refunds on export from the Federal Republic to a third country'.

It appears from the order of reference that this question has arisen in proceedings relating to the export by the plaintiff in the main action to Jugoslavia on 27 June and 4 July 1969 of consignments of pigmeat under heading 02.01.A-III-a-5 described as 'swine bellies and cuts of bellies', the defendant in the main action maintaining that the goods originated in the German Democratic Republic, were brought temporarily to the Federal Republic of Germany and then re-exported in the same condition.

JUDGMENT OF 1. 10. 1974 — CASE 14/74

2 Under Article 6 (1) of Regulation No 177/67 the refund payable on pigmeat exported from the Community is subject to proof that it is 'of Community origin'.

Article 6 makes one exception where Article 7 applies.

This exception relates only to products imported from third countries and re-exported to third countries.

Article 6 therefore does not authorize the grant of a refund for products derived from animals raised outside the Community.

5 The plaintiff in the main action maintains nevertheless that, in the light of the provisions of Article 1 of the Protocol on German Internal Trade, Article 4 of Regulation No 802/68 must be interpreted as meaning that goods imported into the Federal Republic of Germany from the German Democratic Republic must be treated as products originating in the Federal Republic of Germany.

NORDDEUTSCHES VIEH- UND FLEISCHKONTOR v HAUPTZOLLAMT HAMBURG-JONAS

6 Article 1 of the Protocol states 'Since trade between the German territories subject to the Basic Law for the Federal Republic of Germany and the German territories in which the Basic Law does not apply is a part of German internal trade, the application of this Treaty in Germany requires no change in the treatment currently accorded this trade'.

These rules aim only at exonerating the Federal Republic of Germany from applying the rules of Community law to German internal trade.

The dispensation thus granted does not have the result of making the German Democratic Republic part of the Community, but only that a special system applies to it as a territory which is not part of the Community.

JUDGMENT OF 1. 10. 1974 — CASE 14/74

8 This argument, based only on the general scheme established by Articles 9 and 10 of the Treaty, loses sight of the fact that the Protocol on German Internal Trade is an integral part of the Treaty, and under this Protocol, the German Democratic Republic is neither a Member State of the EEC nor, as regards German internal trade, a third country, but a special system is applied to it.

This argument must accordingly be rejected.

9 The plaintiff in the main action claims further that it may be deduced from the fact that a special reason has been given in the Regulation only for Article 7 that therefore Article 6 serves no object of market regulation independent of Article 7 and its sole objective is to make clear that there should be no refund in respect of goods which have been imported from third countries.

Proof that the reason for exclusion specified in Article 7 does not apply can be given by showing Community origin, and if goods do not come under Article 7 of Regulation No 177/67, then by converse reasoning it follows that they had their origin in the Community.

10 This argument disregards the system established in Articles 6 and 7 of Regulation No 177/67.

Although to a certain extent Article 7 of Regulation No 177/67 enables a refund to be granted for imported goods, this is limited to a 'repayment' of levies already exacted.

The scope of the Protocol is therefore misconceived if it is sought to infer from it that the Community must extend the guarantees of prices under the common agricultural policy to products originating in the German Democratic Republic.

12 The question raised must therefore be answered in the negative.

Costs

13 The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, cannot be reimbursed.

As these proceedings are, so far as the parties to the main action are concerned, a step in the action pending before the national court, costs are a matter for that court.

Lecourt Donner Sørensen Monaco Mertens de Wilmars

Pescatore Kutscher Ó Dálaigh Mackenzie Stuart

Delivered in open court in Luxembourg on 1 October 1974.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL REISCHL