C-51/87

OPINION OF MR LENZ — CASE 51/87

OPINION OF MR ADVOCATE GENERAL LENZ delivered on 29 June 1988*

Mr President, system, which the defendant, deviating from Members of the Court, the applicant's proposals, set up in a way which infringes the principles of the customs union and the common commercial policy.

A — Facts 4. The applicant therefore claims that the Court should:

1. As in 1986, 1 the Commission of the European Communities, the applicant, has (i) declare void Council Regulations Nos contested two legal instruments adopted by 3924/86 and 3925/86, the Council of the European Communities, the defendant, whereby tariff preferences were applied in 1987 to certain goods orig- (ii) order the Council to pay the costs. inating in developing countries. 2

5. In the light of the judgment of 26 March 1987 in Case 45/86, the defendant concedes 2. As in the case of the regulations for that the first head of complaint is well 1986, the defendant based the regulations at founded. It nevertheless claims that the issue here on 'the Treaty establishing the Court should: European Economic Community', without giving any further indications as to the relevant legal basis. However, it had the (i) dismiss the application, application of Articles 113 and 235 of the EEC Treaty in mind.

8. None the less, the defendant has neither amended the contested regulations nor Tariff preferences for industrial products repealed and reissued them using the correct legal basis. Since, moreover, the defendant seeks the dismissal of the application despite having acknowledged the illegality of the regulations, the parties are still in dispute. 12. The applicant takes issue, in particular, with the division of the Community quotas into national quota shares of which a first 9. The applicant has indeed abandoned the tranche of 8 0 % is allocated to the Member complaint on the subject during the oral States. The remainder is left in a procedure. However, once it has publicly Community reserve. Only when 9 0 % or aired doubts as to the validity of the more of the initial share is used up may the contested regulation on those grounds, Member State concerned be allocated, from those doubts cannot be expunged by the the Community reserve, a second share withdrawal of a complaint. In any case, the equal to 10% of its initial share. The Court is not prevented from expressing its procedure may, if necessary, be repeated, views on the matter. It is after all incon- but the following tranches are limited to 5 % ceivable that the Court of Justice should, of the initial share. Member States are merely because the applicant has withdrawn permitted to limit their additional shares to some of its heads of complaint, be prevented 6 0 % of their initial share. from declaring the contested regulations to be illegal despite being fully aware of their illegality.

14. The consequence of dividing up and Justice in which the existence of national administering the Community quota is, in quotas was not challenged. the opinion of the applicant, that in indi- vidual cases the shares of a Member State may be used up, thereby necessitating the reintroduction of the duty laid down in the Common Customs Tariff, even though it is 16. In,order to achieve the Community's possible that at the same time goods are task under Article 2 of the EEC Treaty of being imported under the preferential establishing a common market, Article 3 scheme into other Member States because thereof provides that the activities of the they have used less of their shares. In Community are to include the elimination, support of this view the applicant refers to a as between Member States, of customs report by the Court of Auditors which duties and of quantitative restrictions, found presisely that. 4 In addition, it was together with the establishment of a possible that, on account of the dilatory and Common Customs Tariff and a common limited transfer facility available following commercial policy towards non-member the exhaustion of a national quota, the countries. Those activities are specified by importation of goods under the preferential Article 9 of the EEC Treaty, when it provisions had become impossible, whereas provides: in other Member States no use, or incomplete use, might have been made of the share allocated from the Community quota. That is attributable to the fact that the defendant, in originally dividing the 'The Community shall be based upon a Community quotas into national shares customs union which shall cover all trade in according to a fixed scale, based itself on goods and which shall involve the three criteria, namely the external trade, the prohibition between Member States of gross national product and the population customs duties on imports and exports and of the Member State. That fixed appor- of all charges having equivalent effect, and tionment underwent a merely technical the adoption of a common customs tariff in adjustment when the various accessions their relations with third countries.' took place; the defendant took no account of the existence, let alone the evolution, of patterns of trade. 17. That customs union has been described by the Court in its judgment of 13 December 1973 in Joined Cases 37 and 38/73 5in the following terms:

19. The defendant has referred to a series of decisions of the Court of Justice from which it might be inferred that the Court considers the division of Community quotas . . . this common tariff is intended to achieve into national quota shares to be funda- an equalization of customs charges6 levied at mentally lawful. 7 the frontiers of the Community on products imported from third countries, in order to avoid any deflection of trade in relations with those countries and any distortion of free internal circulation or of competitive 20. On closer inspection, however, very conditions.' little can be derived from those decisions to support the defendant's point of view in this case. It must, of course, be conceded to the defendant that, in those decisions, the Court of Justice did not criticize the division of Community quotas into national quota 18. In view of that fundamental characteri- shares. That, however, was mainly because zation of the external aspect of the customs no questions on the subject were raised in union it is hard to perceive how the quota those procedures for a preliminary ruling, system described by the applicant can be which were concerned solely with how the compatible with the uniform application of Member States were required to administer the Common Customs Tariff and hence their national quota shares. with the customs union itself. In particular, one objection is that the system cannot exclude the possibility that, depending on the border through which it enters the Community, a given product may be subject 21. The defendant further relies on the to different customs provisions even though judgment of 13 December 1983 in Case the Community quotas have not been 218/82, 8in which, once again, the Court of exhausted; it may receive preferential Justice did not criticize the allocation of a treatment when the national quota share of Community quota for rum, arrak and tafia the importing State has not been exhausted imported from the ACP States. In that or it may be subject to the full application judgment the Court held that the division of of the Common Customs Tariff in another a global quota into national quota shares Member State whose share has already been may, in certain circumstances, 6be compatible used up. In such circumstances, importation with the Treaty, subject in particular to the under the preferential scheme would be 7 — Sec in particular the judgments of 12 December 1973 in effected exclusively through whichever Case 131/73 Criminal proceedings against Giulio and Member State had not yet used up its quota Adriano Grosoli [1973] ECR 1555; of 23 January 1980 in Case 35/79 G rosoli SpA and Others v Ministry of Foreign shares. That, however, indicates a deflection Trade and Others [1980] ECR 177; of 13 March 1980 in Case 124/79 J. A. van Walsum BV vProduktschap voor Vee of trade which, particularly in the case of en Vlees [1980] ECR 813; and of 7 October 1985 in Case cheap products, could lead to an obstruction 199/84 Procuratore della Repubblica v Migliorini and Fischl [1985] ECR 3325. 8 — Judgment of 13 December 1983 in Case 218/82 Council v 6 — Emphasis added. Commission [1983] ECR 4063.

22. Nevertheless, that statement of the Court cannot be transposed uncritically to the present dispute. The reason is that the 24. Nor can the defendant rely on the regulation 9 at issue in Case 218/82 had judgments of the Court of 15 December been adopted on the basis of Article 2 of the 1976 (Case 41/76 10 ), 5 March 1986 (Case Second ACP-EEC Convention of 31 59/84 11), or 8 October 1986 (Case October 1979, which provided that the 385/85 12) in order to justify the quota-share quantities to be imported duty free were to scheme. In the last-named judgment it was be fixed annually on the basis of the largest merely acknowledged that, since the gener- annual quantities imported from the ACP alized tariff preference scheme was specially States into the Community in the last three designed to benefit the developing years for which statistics were available, countries, stricter rules governing proof of increased by an annual growth rate. The origin of the goods might be established. No opening and the allocation of a Community further inferences relevant to this case may quota are thus determined by the evolution be drawn from that judgment. of trade patterns, which is precisely not the case with the regulations at issue here, as the applicant has asserted without contra- diction from the defendant. The division of the quota, originally fixed in 1971 in the context of the generalized tariff preferences 25. In the two judgments of 15 December for developing countries, has been revised 1976 and 5 March 1986 the point at issue only on the occasion of the various was whether, in the periods in question, the accessions to the Community; the evolution Commission was entitled to authorize of trade patterns, however, has not been protective measures under Article 115 of the taken into consideration in later years, with EEC Treaty. In both decisions the Court the consequence that, when the quota shares recognized that 'the fact that at the expiry of some Member States were used up, of the transitional period the Community goods were imported into the Community at the normal rate of duty even though the 10 — Judgment of the Court of 15 December 1976 in Case 41/76 Donckerwolcke v Procureur de la République [1976] Community quota as a whole was not ECR 1921. exhausted. 11 — Judgment of the Court of 5 March 1986 in Case 59/84 Tezi Textiel BV vCommission [1986] ECR 916. 12 — Judgment of the Court of 8 October 1986 in Case 385/85 9 — Council Regulation No 1699/82 of 24 June 1982 (OJ S.R. Industries v Administration des douanes [1986] ECR 1982, L 189, p. 1). 2929.

26. On the strength of that finding the Court affirmed the legality of the protective measures authorized by the Commission 30. The defendant does not contest that under Article 115 of the EEC Treaty. claim in principle, but submits that the disparate interests of the Member States continue to exist in view of the as yet incomplete implementation of the common commercial policy and the best means of taking account of them is by retaining 27. This case, however, is not concerned national quotas. After the completion of the with measures pursuant to Article 115, internal market scheduled for 1992, which which would, indeed, have had to be must be accompanied by a genuine common adopted by the Commission, the applicant commercial policy, the abolition of national in these proceedings, but rather with the quotas will of course be indispensable. question whether the defendant may, in view of the incomplete implementation of the common commercial policy, also depart from the principles of the customs union.

32. In the light of the foregoing, my Community quotas into national quota conclusion at this stage is that the defendant shares is even more rigid than in the case of was not permitted to formulate the tariff industrial products. The principles of the preference scheme for industrial products in customs union are thus more gravely such a way that in part of the Community infringed than under the provisions on goods had to be imported at the normal rate industrial products considered above. of duty despite the fact that the quota shares in some Member States had not been used up and hence the Community quotas as a whole had not yet been exhausted. 35. In this connection the question may be left open whether the proposals made by the applicant during the preparation of the legislation would have sufficed to take account of the principles of the customs 33. The question of how to formulate a union. Provisions along the lines proposed preferential scheme so as to take account would at least have been 'closer to the both of the principles of the customs union Treaty'. In any event, the provisions which and of the obligation to allow all traders in the defendant actually adopted are not in the Community equal rights of access to the keeping with the principles of the customs quotas is a matter for the legislative bodies union and the common commercial policy of the Community. A possible solution as envisaged in the Treaty and as defined in would be a uniform, common adminis- successive judgments of the Court. tration of the Community quota by the Commission, but a scheme for dividing the Community quotas into national quota shares which take account of trade patterns Continued applicability of the two regulations cannot be ruled out either, provided that either a more flexible arrangement for the Community reserve or a simpler facility for transferring national quota shares ensures that traders can avail themselves of the pref- 36. The applicant has left it to the Court to erence scheme until such time as the decide, under the second paragraph of Community quota as a whole is used up. Article 174 of the EEC Treaty, whether certain effects of the regulations are to be considered definitive.

(3) order the Council to bear the costs.'