C-68/76

1. The imposition of any special 46 cannot be relied upon in formality on intra-Community trade justification of a unilateral derogation constitutes an obstacle to the free from the requirements of Article 34 of movement of goods by the delay the Treaty, even in respect of an which it involves and the dissuasive agricultural product for which no effect which it has upon exporters. common organization of the market 2. Following the end of the transitional has yet been established. period, the provisions of Articles 39 to

In Case 68/76

Commission of the European Communities, represented by its Legal Advisers, Sven Ziegler and Jean Amphoux, acting as Agents, with an address for service in Luxembourg at the office of its Legal Adviser, Mario Cervino, Bâtiment Jean Monnet, Kirchberg, applicant, v

French Republic, represented by Noel Museux, acting as Agent, and by P. Coste, acting as Assistant Agent, with an address for service in Luxembourg at the office of Georges Sidre at the French Embassy, 2 rue Bertholet,

defendant,

1 — Language of the Case: French.

JUDGMENT

Facts

The facts and the arguments put forward export of goods subject to submission of by the parties in the course of the written 'a previously endorsed declaration'. That procedure may be summarized as provision does not provide for the follows: possibility of refusal of that endorsement.

During 1975 a considerable shortage of I — Facts and procedure potatoes occurred throughout the Com­ munity, resulting in substantial price increases. The decree issued on 30 January 1967 by the Director-General of French Customs On 22 October 1975, the French (Journal Officiel de la Republique Republic informed the Commission that française, 31 January 1967, p. 1127), as it intended to monitor exports of last amended by the decree of 20 potatoes, indicating that the relevant October 1975 (loc cit., 30 October 1975, formalities would be automatic. p. 11212), lays down various procedures in respect of imports and exports. Under On 25 October 1975, the French Title 2, Chapter 1, Section 2, it contains Republic published in Journal the rules regarding the procedure for the Officiel de la Republique française a

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'Following the recent adoption by the By letter of 12 January 1976 the Minister for Economic Affairs and Commission invited the French Finance of measures for the stabilization Government to submit its observations of exports of potatoes, representatives of within a period of ten days from the producers and potato merchants had a receipt of the said letter. meeting on 4 November with the director of the FORMA in order to The French Permanent Representative elaborate the new export procedures. informed the Commission by letter of 27 — Each week a quota is to be fixed by January 1976 that the Ministry for Economic Affairs and Finance in respect of the The Notice to Exporters published on 25 October last is not intended to granting of export applications (validity: one month); the size of the impose quantitative restrictions on trade quota is to be proportional to the within the Community. The export state of the market; statistics … show, on the contrary, that — An interdepartmental committee is to sales by France in this sector increased in meet every Thursday to apportion 1975 in relation to preceding years. this quota amongst the various The procedure implemented in France, applicants; as in other Member States, is even — Priority will be given to exports to capable, pending the application of countries which are traditional suitable Community provisions, of purchasers (Federal Republic of helping to alleviate the serious shortage Germany, and in particular the at present being experienced within the Saarland, Italy, the French-speaking Community…' countries of Africa); priority will also be given to traditional exporters and By letter of 24 March 1976 the to exporters who have signed storage Commission delivered a reasoned contracts with the Société Nationale opinion to the French Republic pursuant Interprofessionnelle de la Pomme de to Article 169 of the EEC Treaty, stating Terre.' that:

By letter of 22 June 1976 the French On 20 January 1976, by means of Permanent Representative wrote to the Regulation (EEC) No 128/76 (OJ 1976, L Commission as follows: 14, p. 6), the Council suspended the Common Customs Tariff duty for The disturbances which became ap­ potatoes. parent on the market in 1975 as a result of shortages of that product prompted On 17 February 1976 by Regulation No my Government to undertake a statistical 348/76 (OJ L 43, p. 14) on measures to check on exports in that field and to be taken owing to the difficulties maintain traditional patterns of trade. affecting potato supplies, the Council stated that the shortage and the This exceptional measure, adopted in the consequent risk of an increase in the cost absence of appropriate Community of living provisions, cannot be considered as leading to quantitative restrictions on 'is aggravated by the export of potatoes to trade. non-member countries, encouraged, in some non-member countries, by import It should be noted in this connexion that subsidies; whereas it is necessary, in quantities exported from France in 1975 order to ensure that the Community is were greater than those exported in 1974 supplied, that a tax should be imposed and that the very substantial diminution temporarily on exports of that product to non-member countries', in the volume of exports during the first months of 1976 is to be explained not by provided for the levy of a tax of 25 u. a. the effect of the measures implemented per hundred kilogrammes on exports of on 25 October 1975 but solely by the that product. lack of supplies. By application submitted on 17 July Finally, my Government wishes to point 1976 the Commission brought an action out that traders may at present export before the Court of Justice pursuant to without formality …' the second paragraph of Article 169 of the EEC Treaty in respect of the alleged failure of the French Republic to fulfil its By telex message addressed to the French obligations. Permanent Representative on 29 June 1976 the Commission requested the Having heard the report of the following information: Judge-Rapporteur and the views of the

Advocate-General the Court decided to ([1971] ECR 1107), according to which open the oral procedure without any the application to intra-Community trade preparatory inquiry. of a provision which requires, 'even purely as a formality, import or export licences or any other similar procedure' II — Conclusions of the parties is to be regarded as a measure having an effect equivalent to a quantitative The Commission claims that the Court restriction. should: — Declare that by rendering exports to The French measure and the measure the other Member States of potatoes condemned by the Court in that case covered by subheading 07.01 A III (b) differ only in name. A licence and a of the Common Customs Tariff previously endorsed declaration are in conditional, since 25 October 1975, practice the same thing. By their very upon submission of an export existence such formalities entail extra declaration previously endorsed by administrative work and delays for the FORMA, the French Republic exporters. has failed to fulfil its obligations under Article 34 of the EEC Treaty; Although it is true that a Member State — Order the French Republic to pay the may legally compile statistics con­ costs. cerning trade in potatoes, it may not do so by means of measures equivalent The French Republic contends that the to quantitative restrictions. The Court should: requirement of a previously endorsed — Declare that by rendering exports to export declaration is tantamount to a the other Member States of potatoes negation of the right to the free covered by subheading 07.01 A III (b) movement of goods, since failure to of the Common Customs Tariff observe the requirement results in the conditional, since 25 October 1975, inability to export. upon submission of an export declaration previously endorsed by In fact, the French measure was not a the FORMA, the French Republic mere formality. The true scope of the has not failed to fulfil its obligations procedure is revealed by the information under Article 34 of the EEC Treaty; bulletins, which are published weekly — Order the Commission to pay the under the auspices of the assistant costs. directorate for information, public relations and documentation of the Ministry for Agriculture. The description III — Submissions and argu­ given in those weekly publications has ments of the parties been confirmed by information which the Commission has been able to obtain (1) Whether the French provision is a from the trade circles concerned. measure having an effect equivalent to a quantitative restriction on The statistics showing that exports of exports potatoes to other Member States increased after the introduction of the The Commission maintains that the measure are to be explained by the French measure constitutes a clear shortage and by a sharp increase in infringement of Article 34 (1) of the EEC demand in certain countries. There is Treaty. In this respect it relies principally nothing to show that in the absence of on the case-law of the Court in the French measure exports would not International Fruit Company v have been even higher. In fact, those Produktschap voor Groenten en Fruit statistics are not relevant (cf. Case 12/74,

to which export declarations are issued. The contested Notice to Exporters, as a The French Republic replies that the mere statistical check, therefore in no Notice to Exporters was merely a way contravenes Article 34 of the EEC statistical check which had no effect on Treaty. It is sufficient to consider the trade and, therefore, was perfectly statistics regarding France's foreign trade compatible with Article 34. It maintains in potatoes to realize immediately that that the data contained in the the contested measure, far from having information bulletins can quite clearly actual restrictive effects — whether direct not take precedence over the official or indirect — on intra-Community trade, attitude of the French Government as permitted the volume of that trade to expressed on two occasions to the increase substantially. Indeed, during the Commission. In fact the formalities were period for which the system in dispute automatic, their sole purpose being to was in operation, France supplied its gain information as to the intention of partners with 34 % more potatoes than it exporters regarding sale. had done before the system came into existence and the proportion of exports The Notice to Exporters was a means of to the Member States rose from 64 % to alleviating the effects of the shortage in 83 %. question and, further, it fell very much within the range of powers granted to the In Case 12/74, Commission v Federal Member States by Regulation No 348/76 Republic of Germany, the Court stated of the Council, which in fact enables the that 'it is not necessary to show that such Member States to prohibit exports of measures actually restrict imports of the potatoes to third countries. The very products concerned but … that they may implementation of such a provision merely hinder 'imports [or exports] presupposes the existence of appropriate which could otherwise take place'. measures to control currents of trade. According to that judgment it is at least The characteristic features of supply (a necessary to establish that they may large number of producers who are constitute an obstacle. In the case under widely dispersed and lack organization) consideration positive proof must

In the opinion of the French The French Republic notes that in Government the Court should rule that connexion with freedom to provide since it does not have an effect services, the Court has stated that equivalent to a quantitative restriction 'specific requirements imposed on the the measure at issue is in no way person providing the service cannot be incompatible with Article 34 of the EEC considered incompatible with the Treaty Treaty. where they have as their purpose the application of professional rules justified (2) Justification for the French measure by the general good' (Van Binsbergen, in relation to Articles 38 to 44 of the ground of judgment No 12). Treaty Although the judgment in Charmasson The French Republic adds a number of merely stated that a product, in that case comments on this subject and, for this bananas, which was not covered by a purpose, it accepts, purely for the sake of common organization of the market, was argument, that the Notice to Exporters in subject to the provisions of Article 33, question did indeed have an effect this was not because the Court equivalent to a quantitative restriction. considered that Title II did not apply to it, but because Article 38 (2) makes In that case the legal problem is intricate, reference by implication to the said since it must be determined precisely Article 33.

what law is applicable to an agricultural product which is not yet covered by a The legal rules applicable to those common organization of the market. agricultural products in respect of which the Council has not adopted any By proposing the straightforward ap­ particular measure consist of all those plication of Article 34 to potatoes, the relevant provisions of the Treaty, whether Commission is treating them as an statements of principle or exceptions, as industrial product pure and simple, they have been interpreted by the Court notwithstanding the provisions of Article of Justice. 38 (3) of the Treaty.

a stage well in advance of preference, temporarily, to two of the intra-Community trade, this system objectives of Article 39 — ensuring nevertheless — even if only indirectly availability of supplies and ensuring that or potentially — has effects supplies reach consumers at reasonable equivalent to quantitative restrictions; prices — over the objective of free — The system of production and trade movement laid down elsewhere. quotas for sugar (Regulation No 3330/74) or of catch quotas No argument may be adduced from the (judgment of the Court in Joined fact that the measures at issue were Cases 3, 4 and 6/76) which also have adopted by France and not by an an undeniably restrictive effect on institution of the Community. The legal trade, as the Court also held in Case criterion applicable to the restriction 190/73 in relation to quota cannot be deduced from the national or restrictions on the production of Community origin of the supposedly hyacinth bulbs. restrictive measure. Where secondary Community legislation has already been Other exceptions to the principle of the adopted in relation to a given field the free movement of goods recognized by Member States may not intervene. It may Community law are measures of a be said that the precise purpose of conjunctural nature: secondary legislation is to explain and — Generally speaking, all intervention define in relation to individual cases the

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as an agricultural or as an industrial adopted by the French Government product according to whether the since Community provisions were indeed measure of intervention is Community or adopted in order to counteract the national. shortage of potatoes found to exist within the Community and the supply The only valid solution is to accept the difficulties resulting therefrom. legality of national intervention in application of the provisions of Title II. Following the end of the transitional period, if it appears that special rules for The judgment in Van Binsbergen, which agricultural products are appropriate, acknowledges that the Member States are they may be adopted only within the entitled to restrict freedom of movement framework of the common agricultural for persons in the case of a 'special policy which was to have been condition', clearly demonstrates that the established by the end of the said period Court itself intended to rule to that at the latest. effect: the present case forms part of a body of case-law which is already But the special rules for agriculture well-defined. cannot, in principle, affect the rules of the Treaty concerning free movement of From the point of view of expediency, goods. Those rules are binding upon the since the problem concerns those few Community legislature itself in relation agricultural products which are not yet to the setting-up of the common covered by a common organization of agricultural policy. They are binding a the market, the practical scope of such a fortiori in relation to national measures solution is very restricted. It does not which the Member States may be therefore represent any real danger to the prompted to adopt with regard to common market. agricultural products.

JUDGMENT OF 16. 3. 1977 - CASE 68/76

policy. The same is true of the provisions None of the measures of intervention prohibiting measures having an effect adopted by the Community may be said equivalent to quantitative restrictions: adversely to affect the free movement of Joined Cases 3, 4 and 6/76, Kramer goods within the Community or to ([1976] ECR 1279). constitute a measure having an effect equivalent to a quantitative restriction. The Commission also cites Case 91/75, Hauptzollamt Landau v Miritz, Account should be taken of the stage in concerning Article 37 (4). the economic cycle at which the Community provisions take effect.

market alone. products both in the case of products which are already covered by a common organization of the market and in the The general rules contained in the Treaty case of those which are not yet so on the free movement of goods apply in covered. Regarding customs duties and their entirety with respect to agricultural charges having equivalent effect between products, even in the case of products, Member States, Articles 39 to 46 do not such as potatoes, which are not yet derogate in any way from Article 16 of covered by a common organization of the Treaty and the prohibition on the market: judgment in Case 48/74

What the Court said in relation to Article The powers exercised by the Community 33 in that case also applies to Article 34. depend on the existence of common rules in the field in question: Case 22/70, Even in the absence of a common Commission v Council ([1971] ECR 263). organization of the market in potatoes If the Member States themselves were the Treaty makes available to Member required to refrain from taking action in States the means of alleviating existing fields which the Community institutions difficulties: in the present state of have not yet tackled, the result would be Community law on foreign trade, a complete legal void. Since the existence potatoes are amongst those products in of an organization of the market does respect of which the Member States have not prohibit the Member States from retained, pursuant to Article 10 of intervening in areas not covered by that Regulation (EEC) No 2603/69 (OJ L 324, organization it must follow, a fortiori, English Special Edition 1969 (II), p. 590), that those national powers remain intact the power to adopt independently in the event of a total absence of such measures restricting exports to third organization.

Neumann v Hauptzollamt Hof/Saale IV — Oral procedure [1967] ECR 441; cf. also the judgment in Case 92/71, Interfood v Hauptzollamt During the oral procedure on 2 February Hamburg [1972] ECR 242, ground of 1977, Noel Museux for the French judgment No 5). Republic and Mr Amphoux for the As a general rule, Community law Commission of the European Com recognizes that it may sometimes be munities submitted oral observations.

2. Does the Community law applicable in the major basic agricultural to agriculture authorize, at least in regulations. certain circumstances, exceptions in relation to Community law? This is also the import of the case-law 3. May intervention by a Member State concerning compensatory amounts. Such on the market in a product which is measures are valid even if they obstruct not yet covered by a common the unity of the market since, in the organization take the form of an circumstances in question, they alone are exposition or implementation of any capable of safeguarding the objectives of law creating such exceptions?

JUDGMENT OF 16. 3. 1977 - CASE 68/76

The argument of the French of its argument. In those cases the Court Government will be seen in a favourable accepted the lawfulness of production light if the traditional case-law of the quotas where they were justified by very Court, as regards the derogative nature of specific circumstances, notwithstanding Title II of Part Two of the EEC Treaty, is the fact that those restrictive measures applied to the case. It is not contested had been adopted not according to a that the drought which affected Europe common procedure but by the Member in 1975 and 1976 was of an exceptional States.

nature and that its consequences were extremely severe. Here, then, was one The Court did not adopt the extreme of the circumstances recognized by view of the Commission that the Community law as authorizing the Community or national origin of the implementation of the derogation restrictive measure should be taken as contained in Articles 38 (2) and 33 of the the criterion for its validity. Other Treaty. arguments and considerations militate in favour of a much more subtle use of such It follows from these considerations that a criterion.

The French Government cites Joined The Treaty is an indivisible entity, and Cases 3, 4 and 6/76, Kramer, in support the necessarily partial nature of the

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case-law of the Court on direct effect has decision as to whether the climatic the result in individual cases that some conditions which led the French parts of that entity enjoy a particu­ Government to take the measure at larly well-entrenched implementation, issue were indeed exceptional; whereas other parts remain in the — A check on whether the measure

The answer to this third question is: 'Yes, intentions of exporters in order to make but…'. It is a positive reply on the it possible to encourage Community trade. principle, since only such a reply is in accordance with the Treaty, in that it The objective of the measure was alone enables account to be taken of the obviously to enable exports to third latter as a whole. countries to be discouraged pursuant to Article 1 (3) of the Community As well as the 'Yes', there is the 'But', regulation, which invited the Member since this is not an attempt to cast doubt States to act in that manner (Regulation on the principle of the free movement of (EEC) No 348/76 (OJ 1976, L 43, p. 14)) goods, but simply to effect a fine and, for that reason, it was clearly adjustment in its application to necessary to be able to gain information agriculture and, in this connexion, since first of all on the flow of exports and to in the present case the Council has not be able to prohibit them, and it was adopted measures to this end, it is for the precisely for this purpose that meetings Court to indicate how far and by what were organized. means the Member States may exercise the opportunities for derogation offered It is true that the information bulletins by Title II. make no distinction between exports to third countries and exports to Member The area in which the Member States States, but the reason is that these were may exercise these exceptional powers internal bulletins, that is to say might well be that habitually provided documents in which the French for in the case-law of the Court: Government presents measures in such a — A review of the conclusions drawn way as to satisfy certain categories of from the facts, in the present case a public opinion and, therefore, the

2 As a result of the sharp decrease in the production of potatoes which occurred in northern Europe in 1975 the French Government, by a notice published in the Journal Officiel de la République française on 25 October 1975, made exports of potatoes, that is to say, potatoes other than new potatoes and those intended for the manufacture of potato starch, conditional upon submission of the said declaration.

3 In Information Bulletins Nos 702 and 703 of 8 and 15 November 1975, the French Ministry for Agriculture stated that that measure was intended to 'restrain' and to 'stabilize' exports of potatoes and that a quota would be fixed

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each week by the Ministry for Economic Affairs and Finance 'in respect of the granting of export applications'.

4 Information Bulletin No 703 outlined, more particularly, a system of quotas, the size of which was to be determined in relation to market developments, priority being given to the needs of several States, including two Member States of the Community.

5 Before adopting the measure at issue the French Republic informed the Commission , by telex message, that it intended to subject exports of potatoes to a 'monitoring' procedure, stating that the action to be taken on completion of the formalities would be automatic.

11 There is nothing in the Notice to Exporters and the bulletins to indicate that exports to Member States were to be treated differently from exports to third countries.

12 As regards the latter, the French Government does not contest that the measure at issue had the object and effect of restraining exports.

13 On the contrary, the title of the measure at issue: 'Notice to Exporters to all countries of certain categories of potatoes' could not enable those concerned to conclude that only exports to third countries would be affected.

14 As the Court stated in its judgment of 15 December 1971, in Joined Cases 51 to 54/71 (International Fruit Company NV and Others v Produktschap voor Groenten en Fruit [1971] ECR 1107), apart from the exceptions for which provision is made by Community law itself Articles 30 and 34 preclude the application to intra-Community trade of a national provision which requires, even purely as a formality, import or export licences or any other similar procedure.

15 Accordingly, even if in connexion with intra-Community trade the FORMA granted its endorsement without delay and for all quantities requested, and even if the object of the measure was merely to ascertain the intentions of exporters , it must be held to be a measure having an effect equivalent to a quantitative restriction on exports.

16 Indeed the imposition of any special export formality constitutes an obstacle to trade by the delay which it involves and the dissuasive effect that it has upon exporters.

21 Accordingly, following the end of the transitional period, the provisions of Articles 39 to 46 cannot be relied upon in justification of a unilateral derogation from the requirements of Article 34 of the Treaty, even in respect of an agricultural product for which no common organization of the market has yet been established.

22 Therefore the absence of such an organization does not amount to a legal vacuum which the Member States are entitled to fill, since Articles 39 to 46 of the Treaty remain applicable.

23 It is precisely because of the transfer of powers to a Community and the fundamental purpose of that transfer that, following the end of the transitional period, problems such as that with which this case is concerned may be solved solely by Community measures drawn up in the interests of all producers and consumers within the Community.

24 It must, therefore, be recognized that by rendering exports to the other Member States of potatoes covered by subheading 07.01 A III (b) of the

JUDGMENT OF 16. 3. 1977 - CASE 68/76

Common Customs Tariff conditional since 25 October 1975 upon submission of an export declaration previously endorsed by the FORMA, the French Republic has failed to fulfil its obligations under Article 34 of the EEC Treaty.

1. Declares that by rendering exports to the other Member States of potatoes covered by subheading 07.01 A III (b) of the Common Customs Tariff conditional since 25 October 1975

upon submission of an export declaration previously endorsed by the Fonds d'Orientation et de Régularisation des Marchés Agricoles the French Republic has failed to fulfil its obligations under Article 34 of the EEC Treaty;

2. Orders the defendant to pay the costs.

Kutscher Donner Pescatore

Sørensen Mackenzie Stuart O'Keeffe Bosco

Delivered in open court in Luxembourg on 16 March 1977.