C-45/86

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OPINION OF MR ADVOCATE GENERAL LENZ delivered on 29 January 1987 *

Mr President, Regulation (EEC) No 3601/85 applying Members of the Court, generalized tariff preferences for 1986 in respect of certain agricultural products orig­ 3 inating in developing countries. A — The facts

1. The central issue in the proceedings on 3. Those regulations — whose predecessors which I am called to give my opinion today date back to 1971 —enable customs duties is on the basis of which provisions of the on a number of products from developing EEC Treaty the Council of the European countries to be suspended, either completely Communities was entitled to adopt the or subject to Community quotas or regulations applying generalized tariff pref­ Community ceilings. erences for 1986 in respect of certain industrial or textile products originating in developing countries, and whether, when it adopted those regulations, the Council was 4. When the quotas have been used up the under a duty to specify in the preambles thereto the provisions of the Treaty on Common Customs Tariff is automatically which it was relying. reapplied. As soon as individual ceilings are reached at Community level, customs duties may again be applied to imports of the products concerned. Likewise, a decision 2. On 17 December 1985 the Council of can be taken to reintroduce customs duties the European Communities, acting on a if an increase in preferential imports not proposal of the Commission and having subject to a quota or a ceiling causes regard to the opinions of the European economic difficulties to arise in the Parliament and of the Economic and Social Community or in a region of the Committee, adopted the following three Community. However, customs duties may regulations: not be reintroduced on goods from the least developed of the developing countries.

7. In general, the regulations take account of the degree of development and competi­ 11. In the preamble to Regulation No tiveness of the beneficiary countries and of 3601/85 applying generalized tariff pref­ the 'sensitivity' of the products concerned. erences for 1986 in respect of certain agri­ cultural products originating in developing countries, which is not contested in these 8. Essentially, the system of generalized proceedings, the Council stated that the tariff preferences consists of the suspension, regulation was based on 'the Treaty estab­ without legal obligation on the part of the lishing the European Economic Community, Community and without any requirement of and in particular Article 43 thereof'; in reciprocity, of Common Customs Tariff contrast, the preambles to Regulations duties with a view to facilitating the Nos 3599/85 and 3600/85 contain only importation of certain products from certain the phrase 'Having regard to the Treaty developing countries. establishing the European Economic Community'.

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15. The applicant considers the procedure (2) Order the Commission to pay the costs. adopted by the defendant to be unlawful. In its opinion the Council infringed the 19. Albeit not formally contesting the requirement set out in Article 190 of the admissibility of the application, the Council EEC Treaty to state reasons for measures first expresses doubts as to the existence of and, at the same time, Article 113 of the an actual dispute. It contends that in fact EEC Treaty which was the only possible the Commission is asking for an opinion on legal basis. the interpretation of Article 113 of the EEC Treaty. 16. In May 1986 the Commission waived its right to submit a reply in response to the 20. The Council also questions the defence and asked that the case be given Commission's interest in bringing the priority pursuant to Article 55 of the Rules action, since in the event that the regu­ of Procedure. lations were to be declared void on the grounds of infringement of an essential 17. The Commission claims that the Court procedural requirement substantively should: identical provisions would be adopted again.

(1) Primarily: 21. The Council does regret that it was not possible to specify more precisely the legal basis for the contested regulations but it Declare void Council Regulations Nos considers that that does not constitute a 3599/85 and 3600/85 of 17 December breach of an essential procedural 1985; requirement. In view of the development- policy aim pursued by the adoption of the Declare that those regulations should relevant regulations, Article 113 of the EEC continue to apply until regulations are Treaty was not acceptable as the sole legal adopted pursuant to the judgment in basis. Accordingly, recourse also had to be these proceedings; made to Article 235 of the EEC Treaty.

bility of the application. It argues that as the which is similar to Article 173 of the EEC Commission does not object to the Treaty, in its judgment of 12 February 1983 substance of the regulations at issue but in Case 230/81. 6 The Court stated as only to the procedure whereby they were follows in its judgment: adopted and to the legal basis cited, no real legal dispute is involved. What the Commission is in fact seeking is an opinion on the interpretation of Article 113 of the 28. 'In contrast to the provisions giving EEC Treaty, which cannot be sought in this undertakings and associations legal remedies way. Furthermore, the applicant lacks an such as the second paragraph of Article 33 interest in bringing the action, since even if of the ECSC Treaty, the exercise of the the two regulations were to be declared void right of action by a Member State or the the defendant could again proceed to adopt High Authority is not subject to any in the correct way provisions with the same additional condition involving proof of an content. interest or capacity to bring proceedings.'

25. The Commission for its part argues that 29. I have no hesitation in extending that in adopting the contested regulations the finding to the EEC Treaty, not only because defendant diverged from the substance Case 230/81 was concerned with an of the Commission's proposals as well. application relating to the legal relations Moreover, there is no requirement for between a Member State and the European Community institutions, any more than Parliament on the basis of the three Member States, to show that they have a Community Treaties, but also on the special legal interest or the capacity to bring following grounds. proceedings in the case of an action for a declaration of nullity.

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31. Moreover, a restrictive interpretation of majority, that is to say, not necessarily of all Article 173 of the EEC Treaty is not the Member States. The Commission's room consonant with the Court's case-law, for manoeuvre in order to gain acceptance according to which the Community is a for its own ideas based on its view of what Community based on the rule of law, is good for the Community is therefore inasmuch as neither its Member States nor greater under Article 113 and hence its role its institutions can avoid a review of the in the legislative process is also greater, question whether the measures adopted by especially when it is considered that the 7 them are in conformity with the Treaty. Commission can alter its proposals for legis­ Since from that, and from the further lation at any time, adapting them in the finding that the general scheme of the light of the development of discussions in Treaty makes a direct action available the Council; accordingly, it can shape them against all measures adopted by the into a version which will be acceptable to a institutions which are intended to have legal qualified majority of Council members. effects, the Court has gone as far as to draw the conclusion that actions will lie even against institutions not named in Article 173 of the EEC Treaty, 8an application lodged by the Commission seeking merely the review of the formal validity of an act of the Council must also be admissible. 33. Since the question whether Article 113 or Article 235 of the EEC Treaty was the proper legal basis for the contested regu­ lations consequently also affects the exercise of the Commission's powers, its interest in the action cannot be disputed.

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speak of an 'expedient' of an 'artificial applicant's power to decide how the second nature'. It is not a question of delivering an paragraph of Article 174 is to be applied by advisory opinion on general or hypothetical the Court. It is therefore still a completely questions but of determining the actual open question how the Court will decide powers of two Community institutions in and also whether the judgment of the Court the legislative process. will have retroactive effect.

40. Consequently, it is permissible for a 37. It cannot be concluded that the regulation which has already expired to be application is inadmissible merely on the subsequently declared void. Substantively, basis of the Commission's claim that the there is little difference between declaring substantive effects of the contested regu­ an expired regulation void and annulling an lations should be allowed to continue to individual decision which has already been apply, since it is certainly not within the implemented. In any event, in its judgment

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of 24 June 1986 in Case 53/85 the Court 45. I shall first examine on which provisions held an application for the annulment of a of the EEC Treaty the contested regulations decision which had already been could have been based before considering implemented to be admissible. The Court whether the fact that the Council did not pointed out that the annulment of such a state the precise legal basis in the preambles decision is of itself capable of having legal to the two regulations is also to be regarded consequences, in particular by preventing a as unlawful. future repetition by the defendant of the practice complained of. Ill — The legal basis

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51. Article 113 (1) of the EEC Treaty reads 56. (b) In actually considering whether the as follows: contested regulations can be based on Article 113 I shall not spend overmuch time in considering the theories developed by the two parties. 'After the transitional period has ended, the common commercial policy shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of 57. According to the subjective approach tariff and trade agreements, the achievement put forward by the Council, commercial of uniformity in measures of liberalization, policy covers any measure which export policy and measures to protect trade aims — exclusively and not only in such as those to be taken in case of conjunction with one or more other dumping or subsidies.' aims — to influence and, at the same time,

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to alter the volume or flow of trade is meant by 'commercial policy', a definition (subjective or purposive approach). of the expression has evolved from the judgments and opinions of the Court. As long ago as its judgments of 12 July 1973 in 3 Case 8/73 1 and 15 December 1976 in Case H 41 / 76 the Court held that powers had been conferred on the Community thor­ 58. In contrast, the Commission considers oughly to control external trade by that a trade-policy measure is involved measures taken both independently and by whenever trade is objectively influenced agreement. Furthermore, the Court stated in 15 (objective/instrumental approach). Opinion 1/75 of 11 November 1975 that the concept of commercial policy has the same content whether it is applied in the context of the international action of a State or to that of the Community.

11 — Opinion of the Court of 4 October 1979 given pursuant to 13 — Judgment of the Court of 12 July 1973 in Case 8/73 the second subparagraph of Article 228 (I) of the EEC Haupizollamt Bremerhavens- Masey-Ferguson GmbH [1973] Treaty [1979] ECR 2871. ECR 897. 12 — See Council Regulation (EEC) No 596/82 of 15 March 14 — Judgment of 15 December 1976 in Case 41/76 Criel(née 1982 amending the import arrangements for certain Donckerwolcke) and Henri Schou v Procureur de la products originating in the USSR, Official Journal 1982, République [1976] ECR 1921. I. 72, p. 15; Council Regulation (EEC) No 877/82 of 16 15 — Opinion of the Court given pursuant to Article 228 of the April 1982 suspending imports of all products originating in EEC Treaty of 11 November 1975 [1975] ECR 1355. Argentina, Official Journal 1972, I. 102, p. I. 16 — Loc. cit. paragraphs 43 and 44 ( 0 .

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There is 110. therefore no apparent reason why an exception should be made in the very case of commercial-policy measures which also serve development-policy ends. 65. It follows from the foregoing that trade arrangements with developing countries may still fall under Article 113 of the EEC Treaty where they are justified, inter alia, on development-policy grounds. 63. It should be pointed out in this connection that as long ago as 1979 in Opinion 1/78, which has already been cited, the Court stated that, following the impulse 66. Consequently, the possibility that devel given by Unctad it would no longer be opment-policy objectives underlay the possible to carry on any worthwhile contested regulations cannot be regarded as common commercial policy if the precluding the use of Article 113 of the Community were not in a position to avail EEC Treaty as their legal basis. itself also of more elaborate means devised with a view to furthering the development of international trade.

policy. Community markets' absorption possibilities for certain products were taken into account. Moreover, the Commission has stated, without being contradicted by the Council, that the 'sensitivity' of certain 64. Those principles and objectives certainly products as far as the Community market also include the establishment of Unctad by was concerned was also a factor in deter Resolution 1995 (XIX) of the General mining the precise extent of the tariff pref Assembly of the United Nations of 30 erences. December 1964, one of whose aims is defined as follows: 'To promote inter national trade, especially with a view to accelerating economic development, 68. Finally, a very general observation: particularly trade between countries at while it is possible that through the intro different stages of development, between duction of general tariff preferences in developing countries and between countries respect of certain products from certain with different systems of economic and developing countries those States were for a social organization'. It is clear from that time granted a unilateral advantage, that instrument that trade with developing advantage also served the trading interests

of the Community. As a result of the 72. I do not overlook the fact that Part trading advantages derived by the countries Four of the EEC Treaty is not relevant to concerned from the system of preferences, the present proceedings and has since lost those countries were put in a position to much of its importance owing to the grant earn the necessary foreign exchange in of independence to most of the countries order to re-emerge on the world market as concerned. Despite that, I would refer to purchasers. Since in all probability the that part of the EEC Treaty because it beneficiary countries' demand also extends implicitly recognizes the close connection to goods and services from the between the promotion of the economic and Community — which accounts for the social development of those countries and 17 largest share of world trade — the system the creation of close economic relationships of preferences also indirectly assists exports between them and the Community as a from the Community and hence also the whole. In particular, Article 133 of the EEC Community's classic trade relations. Treaty also refers to the abolition of customs duties not necessarily on the basis of reciprocity, and therefore to tariff pref­ erences. 69. In sum, it must therefore be held that such a close connection exists between the system of generalized preferences and even classic commercial policy that it does not appear appropriate to exclude that system 73. The fact, then, that the EEC Treaty from the scope of Article 113 of the EEC itself contemplated and even enshrined the Treaty contrary to the wording of that link between trade and development article. strengthens the finding that, in the commercial-policy context, measures whose implementation is provided for in Article 113 must be covered by that article even if 70. To conclude my analysis of Article 113 at the same time they serve development- I would further point out that the concept policy objectives. Consequently, the view of the 'new world economic order' which put forward herein with regard to the inter­ was postulated at Unctad and has since been pretation of Article 113 largely corresponds accepted also by the GATT, despite the to the 'objective/instrumental' approach put abandonment of the most-favoured-nation forward by the Commission, which should clause, is in reality by no means such a new be limited by the 'subjective/purposive' concept. approach only in the event of a manifest misuse of powers ('détournement de pouvoir'). But of that there is no evidence in this case. 71. The preamble to the EEC Treaty itself refers to the solidarity which binds Europe and the overseas countries and expresses the desire to ensure the development of their prosperity, in accordance with the principles of the Charter of the United Nations. Those Article 235 of the EEC Treaty ideas took concrete shape in Part Four of the EEC Treaty headed 'Association of the overseas countries and territories'.

'If action by the Community should prove 78. A further condition of Article 235 is necessary to attain, in the course of the that the necessary powers must not be operation of the common market, one of provided for in the Treaty. In order for that the objectives of the Community and this to be so, Article 113 would have to be inter­ Treaty has not provided the necessary preted as not covering the whole of inter­ powers, the Council shall, acting unan­ national trade or, in any event, not trade imously on a proposal from the Commission with developing countries on the basis of and after consulting the Assembly, take the tariff preferences in the area with which we appropriate measures.' are concerned in this case. That would be an instance of a restrictive interpretation of the Treaty. I have grave doubts whether such a method of interpretation — extensive interpretation of the objectives and hence of the jurisdiction of the Community and 75. It is clear from the very wording of restrictive interpretation of its means of Article 235 of the EEC Treaty that the action and thus hindering those system of generalized tariff preferences means — can be reconciled with the system cannot be based on that provision since it of the Community treaties, which are presupposes that the necessary powers are designed to attain limited objectives using not provided for in the Treaty. Since tariff effective means. In any case, this would be preferences can be based on Article 113, to achieve in an exceptionally complicated Article 235 is therefore not applicable. manner an aim which could be achieved much more simply by means of an appro­ priate interpretation of Article 113 in accordance with the past decisions of the Court. 76. It therefore remains to be considered, only on a subsidiary basis in case the Court should not share my opinion with regard to Article 113, whether Article 235 could be 79. In any event, in the final analysis Article used at all as the legal basis for the intro­ 235 of the EEC Treaty does not seem to me duction of the generalized tariff preferences. to afford a certain legal basis for the adoption of the contested regulations. All that reference to Article 235 entails is that the Council has to decide by a unanimous vote, in other words a more ponderous procedure, and one which by no means 77. In order for Article 235 to apply, affords any additional legal certainty. assistance of developing countries would have to be acknowledged as an objective of the Treaty. It is possible to invoke for that purpose the seventh recital in the preamble and Article 3 (k), if they are given a wide 80. In that respect the present proceedings interpretation going beyond their wording differ from Case 8/73, where the Court and covering not only the overseas countries stated in its judgment of 12 July 1973 that and territories formerly dependent on recourse to the Article 235 procedure was 8 certain Member States but all developing justified in the interests of legal certainty. 1 countries, including those which were never One of the questions considered in that in any way dependent on any of the judgment was whether Regulation (EEC) Member States. That would be an instance of an extensive interpretation of the Treaty. 18 — Loc. cit., paragraph 4 at p. 908.

81. It is precisely the last-mentioned factor that affords the actual explanation for that part of the decision, since the regulation on 84. According to the case-law of the Court, the value of goods for customs purposes was Article 190 of the EEC Treaty requires adopted at a time when the Common measures to state the reasons which led the Customs Tariff was not yet in existence, the institution to adopt them 'so as to make transitional period was still in progress and, possible a review by the Court and so that inter alia, Article 113 of the EEC Treaty the Member States and the nationals was not yet applicable, but the other concerned may have knowledge of the provisions did not authorize the Community conditions under which the Community to adopt the relevant rules in the form of a 22 institutions have applied the Treaty'. regulation. It was for that reason that recourse to Article 235 was necessary. Furthermore, it should be pointed out that 21 the successor to the 1968 regulation, 85. However, the extent of the duty to state which replaced it after the expiry of the reasons prescribed in Article 190 depends on transitional period, was indeed based on the nature of the measure in question. With Article 113 of the EEC Treaty. regard to measures having general application the requirements of Article 190 19 — Official Journal, English Special Edition, 1968 (I), p. 170. are satisfied if the statement of reasons 20 — Article 113 (I) of the EEC Treaty. 21 — Council Regulation (EEC) No 1224/80 of 28 May 1980 on 22 — Judgment in Case 158/80 Rewe-HandelsgesellschaftNord the valuation of goods for customs purposes, Official mbH and Others v Hauptzollamt Kiel [1981] ECR 1805, Journal L 134 of 31 May 1980, p. 1. paragraph 25 at p. 1833.

88. Having regard to the Court's judgment 25 of 5 May 1981 in Case 112/80, I consider that the duty to state reasons is fulfilled if 91. In principle, an infringement of the duty the legal basis is at least identifiable from to state reasons causes the whole measure to the preamble to a regulation. be defective: it is a ground for annulment under the first paragraph of Article 173 of the EEC Treaty for infringement of an essential procedural requirement. However, in my view 'infringement of an essential 89. However, the preambles to the two procedural requirement' cannot be contested regulations do not fulfil those understood as meaning that any inaccuracy requirements. It is true that they show very or incompleteness constitutes a failure to clearly what the generalized tariff pref­ state reasons which will result in the nullity of the whole measure. The Council's 23 — Judgment of 29 February 1984 in Case 37/83 Rewe- statement in the oral proceedings that it was Zentrale AG v Landwirtschafiskammer Rheinland [1984] ECR 1229. prepared to acknowledge that it had 24 — Official Journal L 268 of 25 October 1979, p. 1. infringed a procedural requirement but not 25 — Judgment of 5 May 1981 in Case 112/80 Finna Anton an essential procedural requirement is Diirbeck v Hauptzollamt Frankfurt am Main-Flnghafin [1981] ECR 1095, at p. 1113. probably to be construed in that sense.

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95. The Commission stated that its views regarding the substance of the contested 98. Since it is not in dispute between the regulations differed from those of the parties that the substantive content of the Council. If the correct form of decision had contested regulations should not be called been chosen the Commission would have into question, and since the principle of had a greater chance of having those ideas legal certainty requires that the effects of prevail. As a result, the form of the decision regulations should not be called into had a decisive influence on its content. question, in particular in the interests of Accordingly, the Council had infringed an traders and of the beneficiaiy developing essential procedural requirement as well as countries, I propose that the Court should the EEC Treaty. declare, pursuant to the second paragraph of Article 174 of the EEC Treaty, that the contested regulations should continue to 96. Admittedly, the reference to Article 235 apply in substance until such time as the of the EEC Treaty was not the only reason competent institutions have taken the for which the Council took its decision by a measures resulting from the judgment in this unanimous vote. In addition, it had case.

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99. In the oral proceedings there was some effects of the measure which has been discussion as to whether the second declared void should continue, it has the paragraph of Article 174 was restricted to necessary powers to achieve that under the individual legal effects. It should be second paragraph of Article 174 and there is observed that the second paragraph of nothing to prevent it from so doing, as is Article 174 contains nothing to prevent the clear from the Court's case-law, in Court from preserving any effects which it particular the judgment of 5 June 1973 in considers to be necessary; in other words, if Case 81/72 and the judgment of 20 March 26 the Court considers it necessary that all the 1985 in Case 264/82.