C-218/82

JUDGMENT OF THE COURT 13 D E C E M B E R 1983 1

Commission of the European Communities v Council of the European Communities

(Lomé Convention — Allocation and administration of a C o m m u n i t y tariff quota)

Case 218/82

1. Common Customs Tariff — Community tariff quotas — Division into national quotas — Permissibility — Condition — Free movement of goods not hindered by goods admitted to free circulation (Council Regulation No 1699/82, Art. 4 (2))

2. Community law — Interpretation — Methods

COUNCIL OF THE EUROPEAN COMMUNITIES, represented by its Legal Advisers, David Gordon-Smith, Director-General of the Legal Department of the General Secretariat of the Council in Brussels, and B. Hoff-Nielsen, acting as Agents, with an address for service at the office of H. J. Pabbruwe, Director of the Legal Department of the European Investment Bank, Kirchberg, defendant, supported by T H E GOVERNMENT OF THE FRENCH REPUBLIC, represented by Noël Museux and Alain Sortais, acting as Agent and Deputy Agent respectively, with an address for service in Luxembourg at the French Embassy, intervener,

APPLICATION pursuant to Article 173 of the Treaty establishing the European Economic Community for a declaration that Council Regulation N o 1699/82 of 24 June 1982 opening, allocating and providing for the administration of a Community tariff quota for rum, arrack and tafia, falling within subheading 22.09 C I of the Common Customs Tariff and originating in the African, Caribbean and Pacific States (ACP) (1982/83) (Official Journal 1982, L 189, p. 1) is void,

THE COURT

composed of: J. Mertens de Wilmars, President, T. Koopmans, K. Bahlmann and Y. Galmot (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco, O. Due, U. Everling and C. Kakouris, Judges,

Advocate General: S. Rozès Registrar: P. Heim

gives the following

The objective of Protocol No 5 is to I — F a c t s and w r i t t e n p r o c e d u r e develop traditional trade flows in rum while limiting the amount of rum which can be imported free of customs duties Article 2 (1) of the Second ACP-EEC into the Community. Convention signed at Lomé on 31 October 1979, provides that "products Article 2 provides: originating in the ACP States shall be imported into the Community free of customs duties and charges having an "(a) For the purposes of applying Article equivalent effect". Protocol No 5 to the 1 and by derogation from Article 2 Convention creates an exception to this (1) of the Convention, the Com- rule with respect to rum. munity shall each year fix the quantities which may be imported free of customs duties on the basis Article 1 of Protocol No 5 states: of the largest annual quantities imported from the ACP States into the Community in the last three "Until the entry into force of a common years for which statistics are organization of the market in spirits, available, increased by an annual products of tariff subheading 22.09 C I growth rate of 40% on the market originating in the ACP States shall be of the United Kingdom and 18% imported duty free into the Community on the other markets of the Com- under conditions such as to permit the munity. development of traditional trade flows between the ACP States and the Community and between the Member (b) Where the application of the States." provisions of the point (a) hampers the development of a traditional trade flow between the ACP States and a Member State, the Com- The purpose of Protocol No 5 is to munity shall take appropriate preserve and develop traditional trade measures to remedy the situation. patterns in rum. Essentially there are two main trade flows in rum existing within the Community. The United Kingdom ..." has generally imported rum from the Commonwealth members of the ACP To give effect to the Protocol, the whereas other Member States, notably Community, adopts a regulation

"The United Kingdom shall take the 2. Order the applicant to pay the costs. steps necessary to ensure that the quantities imported from the ACP States under the conditions laid down in I l l — S u b m i s s i o n s and a r g u m e n t s Articles 1 and 2 are restricted to those of the p a r t i e s meeting its domestic consumption requirements." The Commission submits that Article 2 The Commission, in an application (2) of Regulation No 1699/82 is registered at the Court on 13 August contrary to Articles 30 and 34 of the 1982, requests the Court to declare EEC Treaty and consequently contrary Regulation No 1699/82 void in that to Article 9 of the Treaty. The purpose Article 4 (2) of the regulation constitutes of Article 4 (2) is to require the United a breach of Articles 30 and 34 and Kingdom to prevent the movement of consequently of Article 9 of the EEC spirits from its territory. The Com- Treaty. mission draws the Court's attention to the . French version of the provision The French Government, by an ap- which reads: plication registered at the Court on 16 December 1982, requested permission to "Le Royaume-Uni prend les mesures intervene in the proceedings. By an order nécessaires pour que les quantités of 19 January 1983 the application of the importées des États ACP dans les French Government to intervene was conditions fixées aux articles 1 et 2 allowed. soient réservées aux besoins de sa consommation intérieure." The written procedure followed the normal course. Having heard the report This wording, the Commission contends, of the Judge-Rapporteur and the views leaves no doubt that the object of the of the Advocate General, the Court provision is to prevent the re-export to

The disputed provision is also contrary to Article 9 of the Treaty as the products in question are in free circulation in the Although the object of the regulation is Community. to give effect to the Community's commitments in the Second ACP—EEC Convention, this does not justify a breach of the fundamental principle of The Commission does not accept that the free movement of goods. Article 4 (2) can be interpreted as requiring the United Kingdom to restrict the import of quantities of the spirits within the instalment of the quota The Community institutions must, in the intended for the United Kingdom exercise of their powers, respect the because: unity of the market. In order to introduce measures which run counter to that principle it is necessary to find in the Treaty a provision which either expressly (i) the basis of the instalment is that it or by necessary implication provides for is for United Kingdom consumption or authorizes the introduction of such (Article 2) and it is calculated on measures (Joined Cases 80 and 81/77 the basis of the largest quantity Ramel v Receveur des Douanes [1978] imported annually into the United ECR 927). Kingdom during the three previous years and taking account of the growth rate of 40% on the market The Commission is of the opinion that of the United Kingdom; the Community's obligations under the Second ACP—EEC Convention could be met in a manner consistent with main- (ii) it is not therefore intended to taining the free movement of goods represent a figure other than one of within the Community, which it sets out actual imports for consumption; in its proposals to the Council. These proposals envisage a Community reserve, arrangements for its sharing and for (iii) for the United Kingdom to refuse returning unused parts of the quotas to to accept its instalment, even if it the reserve. could, would be contrary to the principal object of the regulation and to the commitment in Protocol The Commission argues that any threat No 5 annexed to the Second to the legitimate interests of a Member

State which might arise could be the products in question on the adequately protected by an exercise by Community markets. the Commission of its powers under Article 115 of the Treaty. The existence of a reserve would have made it possible for the Member States The Commission does not deny that the to draw on the reserve, thus leading to Council has a duty to enact a regulation their share of the quota and the annual to give effect to the Community's growth rate being exceeded. commitments. It therefore submits that the Court in the exercise of its powers under Article 174 of the Treaty should Given the circumstances in which Regu- state that the right to import duty free lation No 1699/82 was adopted, the into the Community from 1 July 1982 to Council argues that Article 4 (2) is not to 30 June 1983 the quantities of goods set be interpreted as prohibiting the re- out in Article 1 of the regulation should export of rum from the United Kingdom be considered definitive. but rather as imposing an obligation on the United Kingdom to limit the quantities imported to those intended for domestic consumption. The Council in its defence rejects the Commission's submission that Article 4 (2) of Regulation No 1699/82 con- stitutes an obstacle to the free movement This interpretation of Article 4 (2) is of goods within the Community. The based on the English version of the text. true meaning of Article 4 (2), it claims, The Council admits that the French may only be ascertained by examining version of the text is susceptible of being the background to Regulation No interpreted as a prohibition on re-export. 1699/82. However, the Council submits that in the present case particular weight should be given to the English text because it is the language of that Member State and Regulation No 1699/82 is designed to because is results in a less onerous implement Protocol No 5 to the Second obligation for the Member State ACP—EEC Convention. The Council concerned. considers that the system of calculating the quotas to be imported into the Community is compatible with the terms of the Protocol. Similar arrangements The Council draws the Court's attention involving the total distribution of a tariff to the measures taken by the United quota have been before the Court in Kingdom to fulfil its obligation under Case 131/72 Grosoli [1973] ECR 1555, the regulation. Provision for the Case 35/79 Grosoli [1980] ECR 177 and administration of the United Kingdom's Case 124/79 van Walsum [1980] ECR share of the tariff quota is made by the 813, in which it has not been suggested Customs Duties (Quota Relief) Order that these arrangements are contrary to 1982, Statutory Instrument 1982, No Community law. Provision for a reserve 884. According to this Order goods shall as suggested by the Commission would be treated as forming part of the relevant make the entire system more flexible but, United Kingdom quota on acceptance of according to the Council, would have an entry for home use accompanied by been undesirable given the sensitivity of the relevant documents. The Council

The Council acknowledges that the provisions of the Treaty relating to the free movement of goods are also applicable to the Community institutions, including the Council. However, the The Council rejects the argument of the Council submits that, when adopting Commission that if its proposal had been secondary legislation, the Community adopted, the legitimate interests of one legislature may make provisions which or more Member States could be would be contrary to the Treaty if made protected by virtue of Article 115. Article by a national legislature. The Council 115, the Council states, applies only recalls the recognition by the Court of where national measures of commercial the existence of a power to institute policy exist in the absence of any charges for veterinary controls (Case common commercial policy; in the 46/76 Banhtiis v The Netherlands State present case a Community regulation [1977] ECR 15) and that the Court in based on Article 113 exists and its several judgments has acknowledged the subject-matter forms part of the common legality of monetary compensatory commercial policy. amounts.

Finally, the Council points out that it has, since 1975, adopted nine regulations The Council argues that the Court with essentially the same provisions. should, in determining what constitutes a Until the present case the validity of measure having equivalent effect, weigh these regulations has never been the purpose and advantage of the questioned either by the Commission or measure against any potentially re- by any other interested party.

The Commission, in its reply, states that quantities as progessively increased are it has expressed doubts as to the to be restricted to consumption within compatibility of certain provisions of the the United Kingdom. Council regulations with the provisions of the Treaty relating to free movement of goods. In the face of the persistent As to the procedure adopted by the refusal by the Council to take account of United Kingdom to implement Regu- these observations, the Commission lation No 1699/82, the Commission says made the following declaration which that it limits the free movement of goods was recorded in the minutes of the from the United Kingdom in that it Council meeting which adopted Regu- imposes a financial burden on any lation No 1699/82: proposed export from the United Kingdom to any other Member State of the Community of goods covered by the "(a) The Commission notes that certain Protocol. If the Council accepts that provisions adopted by the Council such a measure complies with Article 4 in the regulation opening the (2) of the regulation, it is admitting that Community tariff quota for the the regulation is illegal in that it creates import of the products falling barriers to the movement of goods from within subheading 22.09 C I of the the United Kingdom. CCT originating in the African, Caribbean and Pacific States are incompatible with the rules of the The Commission does not accept that EEC Treaty. the Council has power to impose restrictions on the free movement of goods in order to give effect to its inter- national agreements. The enactment of a As it had informed the Council in regulation which requires the compart- COM(82) 243 final, the Com- mentalization of the Community, not to mission firmly intends to have protect the lawful interests of a Member recourse to the provisions of Article State but to prevent a Member State 173 of the Treaty. from exporting to all other Member States, is not within the competence of the Council. (b) Abolition of the Community reserve The Council, in its rejoinder, argues that The Commission regrets the fact Article 2 (a) of the Protocol which that the Council's draft regulation provides for a method of calculation of adopted by the "Working Party the annual quantities increased by a yearly growth rate of 4 0 % on the excludes the constitution, proposed market of the United Kingdom and 18% by the Commission, of a Com- on the other markets of the Community munity reserve." clearly implies that it cannot have been intended to grant the ACP States a right to duty-free importation of the whole of Turning to the method of calculating the the Community's annual quota into the rate of increase of the quantities of rum United Kingdom, regardless of whether to be imported, the Commission argues the imports were intended for con- that to allow the United Kingdom a sumption in the United Kingdom or in higher growth rate than that of the other the other Member States. It was intended Member States does not imply that the that separate instalments should be fixed

for the United Kingdom and the other 1. The quantities imported by the United Member States. It follows that the Kingdom in respect of its share of the Community is entitled to take steps to quota must originate in the ACP ensure that amounts charged against the States. United Kingdom instalment at the time of importation are intended for United Kingdom consumption. 2. They must be free from customs duties as long as its share has not been exhausted. The Council feels that there would be no purpose in the export from ACP 3. They must correspond to the countries of rum duty free to the United domestic consumption requirements Kingdom unless there was a market for of the United Kingdom market. it there. If there was no market in the United Kingdom the quantities in question could be exported directly to the other Member States as opposed to The United Kingdom authorities must being imported into the United Kingdom ensure that these conditions are and exported from there to other observed. There are no further Member States. obligations imposed on the United Kingdom Government. Since there is no provision prohibiting the re-export of rum, Regulation No 1699/82 docs not The French Government, in its infringe Article 34 of the Treaty. intervention, points out that the French and English versions of Article 4 (2) of Regulation No 1699/82 have two In order to ascertain the true meaning of different meanings. Whilst the French Article 4 (2), proper regard must be had version may be interpreted as being to the context in which it was adopted. intended to have a restrictive effect on trade within the common market, the English version must be interpreted as The purpose of the Protocol on rum is to providing for "voluntary restraint" in ensure the development of existing respect of United Kingdom imports, traditional trade flows between certain taking effect at the external frontiers of ACP States and the United Kingdom on the Community. In the opinion of the the one hand and between the Overseas French Government, the English version French Departments and other Member of Article 4 (2) should prevail as the States on the other hand. It is clear from provisions relate to the United Kingdom Article 1 of the Protocol that the alone. development of one trade flow must not inhibit the development of the other traditional trade flows. The French Article 4 (2) does not lay down and is Government considers that the system not intended to bring about any chosen by the Council is the best method quantitative restrictions on imports by of ensuring the achievement of this other Member States. It is not, therefore, objective. The division of the whole of a contrary to Article 30 of the Treaty. quota amongst the Member States has been used for other products in the Community (Council Regulation No 3378/82 of 8 December 1982 applying Article 4 (2) imposes three obligations on generalized preferences for 1983 in the United Kingdom: respect of certain industrial products

Decision

1 By application l o d g e d at the C o u r t Registry o n 13 A u g u s t 1982, the Commission of the E u r o p e a n Communities b r o u g h t an action u n d e r the first p a r a g r a p h of Article 173 of the E E C T r e a t y for a declaration t h a t Council Regulation N o 1 6 9 9 / 8 2 of 24 J u n e 1982 opening, allocating a n d providing for the administration of a C o m m u n i t y tariff q u o t a for r u m , a r r a c k and tafia, falling within subheading 22.09 C I of the C o m m o n C u s t o m s Tariff and originating in the African, Caribbean and Pacific States (ACP) (1982/1983) (Official J o u r n a l 1982, L 189, p . 1) is void.

COMMISSION v COUNCIL

2 Article 2 (1) of the Second ACP—EEC Convention, signed at Lomé on 31 October 1979, provides that "Products originating in the ACP States shall be imported into the Community free of customs duties and charges having equivalent effect."

3 Protocol No 5 annexed to the Convention creates an exception to that rule with respect to rum. Article 1 of Protocol 5 states:

"Until the entiy into force of a common organization of the market in spirits, products of tariff subheading 22.09 C I originating in the ACP States shall be imported duty free into the Community under conditions such as to permit the development of traditional trade flows between the ACP States and the Community and between the Member States."

s According to the Commission the purpose of that provision is to prevent the exportation from the United Kingdom to the other Member States of quantities forming part of the quota allocated to the United Kingdom. The regulation in question therefore infringes Articles 30 and 34 of the Treaty and should therefore be declared void, subject, however, to the Court's declaring the effects of Article 1 of the said regulation to be definitive pursuant to the second paragraph of Article 174 of the Treaty.

9 The Commission is contesting the validity not of the practice of allocating a global tariff quota among the Member States but of the prohibition of re- exportation to other Member States which is deduces from Article 4 of the regulation.

io According to the Council, whose arguments on this point are supported by the Government of the French Republic, the Commission's interpretation of Article 4 as set out above is incorrect. The provision does not have scope attributed to it by the Commission and thus the regulation does not infringe Articles 30 and 34.

n The Council notes that traditionally more rum from the ACP States is exported to the United Kingdom (where it is intended for domestic consumption) than to the other Member States. Taking that fact into account, Article 2 (a) of the Protocol provides that the growth rate for the development of trade referred to in Article 1 will be different for the United Kingdom (40%) and for the remainder of the Member States (18%) and the regulation reflects those figures in the calculation of the quotas allocated.

16 In this case the interpretation suggested by the Council is entirely consistent with the wording of the provision in question in its English version without being irreconcilable with the other versions of the provision and it corresponds, moreover, to the objective of Protocol No 5 whose attainment it facilitates.

17 It follows from the foregoing that the contested provision does not require the United Kingdom to limit exports of rum originating in the ACP States to other Member States, as the Commission has maintained, but merely to ensure that the quantities imported into the United Kingdom are limited to those corresponding to its domestic consumption requirements. The contested provision is, therefore, in conformity with the Treaty.

18 Consequently the application must be dismissed.

JUDGMENT OF 13. 12. 1983 — CASE 218/82

Costs

i9 Under Article 69 (2) of the Rules of Procedure, the unseccessful party is to be ordered to pay the costs. As the Commission has failed in its submissions, it must be ordered to pay the costs, including those of the intervener.

Galmot Pescatore Mackenzie Stuart O'Keeffe

Bosco Due Everling Kakouris

Delivered in open court in Luxembourg on 13 December 1983.

For the Registrar

H . A. Rühi J. Mertens de Wilmars Principal Administrator President