C-430/92

I-5199

OPINION OF MR GULMANN — CASE C-430/92

4. In this case the Netherlands Government expiry of the 60-day time-limit, counting has asked for a declaration that the Commis­ from the date of receipt of the request. How­ sion refusal of the Netherlands Antilles' ever, it is also established that whilst the mat­ request for a derogation is void. The govern­ ter was being dealt with the Commission ment claims primarily that the refusal was asked the Netherlands Government for fur­ given after the time-limit laid down in the ther information and in that connection the said Article 30 for dealing with the request Commission informed the government that had expired, and that in accordance with the the 60-day period would begin to run from express provisions of Article 30 the request the date on which it received the relevant must therefore be deemed to have been information. Finally it may be stated that the accepted. The government claims in the alter­ refusal was given within the 60-day period native that the refusal is unjustified in fact counting from the receipt of that informa­ and that moreover the statement of the rea­ tion. sons on which it is based is insufficient.

The time-limit for dealing with the matter The question at issue is therefore whether the Commission was justified in altering as it did the date on which the period began to run.

5. Article 30(8)(a) provides that 'the Council and the Commission shall take all the neces­ sary measures to ensure that a decision is taken promptly and in any case not later than 60 working days after receipt of the request'. 7. To answer that question it is necessary to give an account first of the relevant proce­ dural rules to be followed in deciding upon a request for a derogation and secondly of the specific circumstances relating to the request in this case.

origin of goods. The request may be made the request and the committee is to deliver by the Member State concerned or where an opinion within a period laid down by its appropriate the competent authorities of the chairman. The Commission is required to OCT concerned. Article 30(2) states that 'the inform the Council forthwith if its final deci­ fullest possible information' shall be fur­ sion is not in accordance with the commit­ nished, in particular with regard to a number tee's opinion. of points listed in detail and that a special form given in Annex 9 to Annex II is to be used for the request. The form specifies in detail in 21 points what information is to be given in respect of the request, for example the anticipated annual quantity of exports to the Community, the value of the materials used which originate in third countries, the finished product's value ex-works, the rea­ sons why the rule of origin for the finished product cannot be fulfilled, the value of the materials to be used originating in ACP countries, the EEC or OCT, the value of the firm's investments and the possible develop­ 10. In this case the request for a derogation ments in the future to overcome the need for was received on 1 June 1992. The request, a derogation. drawn up by the Government of the Nether­ lands Antilles, was submitted through the Netherlands Permanent Representation to the European Communities. The abovemen- tioned form, completed, accompanied the request. It was stated that the application was submitted 'in the interest of industrial development and on behalf of a potential investor', that the proposed production of pre-recorded video-cassettes was to be 9. It may be seen, moreover, from Article undertaken by the firm TVTEC in Curaçao 30(8)(a) that the case is to be treated in accordance with Council Decision by means of materials imported from Korea, 90/523/EEC on the procedure concerning Japan and the USA, and that in the opinion derogations from the rules of origin set out of the government 'such an industry could in Protocol No 1 to the Fourth ACP-EEC make a significant contribution to diversify Convention. 3According to that decision it its economy, strengthen its export structure is the Commission which takes the decision and reduce unemployment'. It was further with regard to a derogation, but in collabo­ stated that 'given the anticipated volume of ration with the aforesaid Committee on Ori­ exports from Curaçao and the scale of the gin. The Commission's draft common posi­ EC market for pre-recorded video-cassettes, tion is to be submitted to the committee no serious injury should be expected to be within 20 working days after the receipt of caused to an established EC industry. On the other hand, the establishment of TVTEC is regarded as a substantial contribution to the development of export-orientated industries 2 — OJ, English Special Edition 1968 (I), p. 165. in the Netherlands Antilles'. 3 — OJ 1990 L 290. p. 33.

Under point 19 on other possible sources of supply for materials it was stated: 'Pancake and master copy material can be sourced from Germany, the Netherlands, inter alia, with comparable quality but at substantially Point 12 of the form, regarding the produc­ higher cost. India is also a possible source of tion planned was filled in as follows: 'A mas­ pancake. V-zeroes can be sourced inter alia ter tape, supplied by the client, is copied on a from Portugal. The best price/quality how­ number of mirror masters. The master tape is ever can be obtained in the U. S. Packaging returned to the client. The mirror masters are material can be sourced from many different recorded on to blank magnetic tape rolls countries.' (pancakes) on high-speed duplicators. The quality of the recorded pancakes is checked. The recorded pancakes are loaded into the empty VHS video-cassettes on a video tape loader. The pre-recorded cassettes are shipped to the client for distribution.'

Point 20 on 'Possible developments to over­ come the need for a derogation' was filled in as follows: 'The possible import of pancake and V-zeroes at competitive prices from Europe shall be investigated'.

With regard to the origin of the materials mentioned, the government stated as follows in point 8 of the form: 'The rules of origin for the finished product cannot be fulfilled because the Netherlands Antilles has no pro­ 12. On 5 June 1992 the relevant Commis­ duction of pancake, V-zero, master-copy sion office sent the request to the members material or packaging material. With the pos­ of the Committee on Origin. The accompa­ sible exception of packaging material the nying memorandum stated that the 60-day required investment in starting such indus­ period for replying to the request had started tries is prohibitively high and not realistic.' to run on 1 June 1992.

13. It appears from the documents that the request was discussed by the Committee on Origin at its meeting in June. After that meeting the Netherlands Permanent Repre­ In this respect, the Kingdom wishes to point sentative to the EC sent a letter on 9 July out that direct consignments of Korean and 1992 to the responsible Member of the Com­ Hong Kong exporters to the Community of mission 'as a contribution to the discussion' pre-recorded video tapes ... are not subject to in the Committee on Origin since the Com­ anti-dumping duties and are entitled to a mission had 'drawn the delegation's atten­ (limited) zero rate of duty by virtue of the tion to a number of negative considerations'. GSP ...'.

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OPINION OF MR GULMANN — CASE C-430/92

16. That answer was given by the Nether­ lands representative on the Committee on 15. The Netherlands Permanent Representa­ Origin for the purpose of its consideration tion to the EC answered the letter on of the request, who made a statement on 18 August 1992. It stated that at that time it 1 October 1992, from which it appeared that would lead to too high costs if the produc­ the Netherlands Government regarded the tion planned were to use materials from the request as accepted since the Commission Community, but that the undertaking con­ had not taken a decision before the expiry of cerned would naturally follow price develop­ the 60-day period laid down in Article 30(8).

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NETHERLANDS v COMMISSION

17. By decision of 6 November 1992 the require the applicant to amplify the request Commission, as stated, refused the request. so that it contains the necessary basis for a The statement of the reasons on which the decision to be taken. One may say that the decision was based will be examined later. application submitted must satisfy certain minimum requirements if it is to be regarded as a request within the meaning of Article 30.

18. It may be accepted that the 60-day period under Article 30(8)(a) had expired on 21 August 1992 if it had started to run from receipt of the request on 1 June 1992 but that it had not expired on the date of the Com­ 21. It seems to me equally clear that strict mission decision if it started to run only limits must be placed on the Commission's when the Commission received the answer ability to postpone the date at which the from the Netherlands to its request for fur­ period starts to run by means of requests for ther information contained in its letter of further information. 31 July 1992.

23. Secondly it must be a question of factual information of clear relevance to the decision to be taken by the Community institution ·— the Commission cannot without the appli­ cant's agreement decide to extend the time- limit with a view to further arguments for the material justification for the request — 25. The Commission contends that the and it must be information which may most information for which it asked in its letter of appropriately be furnished by the applicant, 31 July 1992 was of essential importance for that is, it may not be information with its decision and that it therefore justified regard to circumstances which the Commu­ postponing the date on which the prescribed nity institution itself is best placed to pro­ period started to run. cure.

24. Thirdly the Commission must be expected to decide as quickly as possible

28. The information thus required or rather the comment on the problem mentioned is not of such a nature as to justify extending In the present case, there is no indication the time-limit. The Government of the Netherlands Antilles had already explained that the company involved will in future in its application of 27 May 1992 that certain comply with the normal rules.' of the necessary raw materials might be obtained in the Community but that they were of lower quality or dearer, or both, than corresponding goods from third coun­ tries, so that application of the rules on cumulation of origin could not solve the 30. In the last section of its letter the Com­ problem either qualitatively or economically. mission states: Moreover that question was also discussed in the letter of 9 July 1992 from the Nether­ lands authorities. The view expressed by the Commission in connection with its request for supplementary information is naturally relevant to a decision on the request, but is not an expression of a real need for addi­ 'Finally, in accordance with Article 30(1), the tional factual information but rather of a question of whether the requested deroga-

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OPINION OF MR GULMANN — CASE C-430/92

tion would not cause an injury to an estab­ natural for the Community institutions lished Community industry should be themselves to procure any further informa­ answered. tion required.

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NETHERLANDS v COMMISSION

34. The Commission's request in its entirety The Commission decision of 6 November must in my view be regarded in the first 1992 place as an attempt — justifiable in itself — to obtain from the Netherlands Government more detailed arguments for an acceptance of its request.

37. According to Article 131 of the EC Treaty the purpose of the association of overseas countries and territories is to pro­ mote the economic and social development The circumstances referred to in the letter do of those countries and territories. Accord­ not provide a sufficient basis for an extension ingly it follows for example from the provi­ of the time-limit. That is confirmed by the sions on freedom from customs duties that fact that the majority of the problems raised products originating in the OCT benefit, on by the Commission in its letter of 31 July importation into the Community, from the 1992 — at a late stage in the consideration of abolition of customs duties under Commu­ the request as normally envisaged — had nity law, whereas the countries and territo­ already been identified by the Commission ries 'may ... levy customs duties which meet in its memorandum of 5 June 1992 to the the needs of their development and industri­ members of the Committee on Origin. alization or produce revenue for their bud­ 6 gets'.

35. It follows that in accordance with the provisions of Article 30(8)(b) of the Annex, the request must be deemed to have been 38. Article 30 of the Annex concerning the accepted and that the Netherlands Govern­ definition of the concept of Originating ment's application for a declaration that the products' must be interpreted in the light of decision is void must be upheld if only for the purpose of the rules of the association that reason. and may moreover in its specific wording be regarded as an expression of the Communi­ ty's basic readiness to accommodate the OCT. Derogations may be adopted 'where the development of existing industries or creation of new industries justifies them' and 'the Community shall respond positively to all requests which are duly justified ..., in

39. The Netherlands Government contends that in its decision of 6 November 1992 the Commission did not have sufficient regard to the situation in the Netherlands Antilles and 42. In this case the Commission, after refer­ the Community's basic accommodating atti­ ring to the relevant rules, states that the tude towards the OCT. In addition the request does not explain whether the neces­ Netherlands Government claims that the sary basic materials may be procured from statement of the reasons on which the Com­ neighbouring (non-associated) developing mission decision is based is insufficient. countries, and further observes that the rele­ vant materials are sensitive and subjected to protective measures on the world market. Here the Commission is probably referring to the provisions of Article 30(6) of the Annex, according to which, in the examina­ tion of requests, special account is to be taken in each individual case of the possibil­ ity of conferring originating status on prod­ 40. Even though the government must be ucts which include in their composition regarded as right in stating that a decision on materials originating in neighbouring devel­ a request for a derogation must be oping countries or least-developed countries. approached in a basically accommodating spirit, one must agree with the Commission that the conditions which must be met under the rules for a request to be accepted are dis­ cretionary and involve appraisal of complex economic situations. That is important, as it follows from the Court's case-law that in such cases the Court will limit its judicial review to verifying whether the facts on which the contested choice is based have been accurately stated and whether there has 7 been a manifest error of appraisal thereof. It seems unclear to me what weight may be attached to the fact that the form does not expressly explain whether materials may be procured in such countries. However, it does 7 — Judgment in Case C-174/87 Ricoh v Council [1992] ECR I - 1335. paragraph 68. not seem unreasonable to regard the express

'... apparently no real effort is envisaged by the company to buy the materials in the Naturally it is not possible to criticize the Community, the OCT or in the ACP coun­ Commission for basing its decision on the

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OPINION OF MR GULMANN — CASE C-430/92

idea that a request may be refused on the solving temporary problems of OCT indus­ ground that the applicant has made insuffi­ tries in dealing with the rules of origin and cient use of the real existing opportunities not at providing a (semi-)permanent non- for buying materials in the Community or application of those rules'. the like. However, it must be regarded as basic in this respect that the Commission may refuse a request on those grounds only in so far as the relevant materials from the Community or the like are genuinely com­ petitive as regards price and quality as com­ pared with the corresponding materials from third countries which the applicant is plan­ ning to use in the manufacture. That refers to the provisions of Article 30 to the effect that the development of existing industries or the creation of new ones should justify the derogation and that there should be substantial processing or working in the relevant OCT. 45. In addition the Commission includes the following in the reasons on which its deci­ sion was based:

'... the activities carried out in the Nether­ 46. The Netherlands Government denies lands Antilles appear to constitute a rela­ that the Commission could assess the tively minor operation resulting in a minimal planned production as being relatively added value and not really leading to the cre­ minor, that it would result in minimal added ation of a durable and substantial new eco­ value and would not lead to the creation of a nomic activity;' durable new economic activity. It refers to the information supplied and in particular to the fact that the added value was 50%.

50. The Commission gives the following as the final reason for its refusal:

'Without prejudice to paragraphs 1 to 6, the derogation shall be granted where the value added to the non-originating products used in the country or territory concerned is at least 45% of the value of the finished prod­ '... the Community video-cassette industry uct, provided that the derogation is not such has recently suffered injury from dumping as to cause serious injury to an economic practices by major foreign competitors, such sector of the Community or of one or more practices having also taken place on third Member States'. country markets, and ... anti-dumping mea­ sures can only redress injury on specific mar­ kets but cannot restore fair competition on a world level, thus leaving the EC industry open to attack both in third country markets and in its own market as a result of the importation of low-price downstream prod­ It may presumably be deduced from that ucts; provision that when the added value is at least 45% the Commission is precluded from stating as a reason for refusal that there will not be any substantial processing or work­ ing. In any case it does not seem convincing when the Commission claims that the open­ ing words of the subparagraph 'without prej­ udice to paragraphs 1 to 6' give the opportu­ nity to continue to have regard to the ... the EC pre-recorded video-cassette dupli­ amount of the added value in spite of the cating industry is itself undergoing pressure percentage stated. from abnormally low-priced imports made

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OPINION OF MR GULMANN — CASE C-430/92

51. The Netherlands Government claims that the Commission has not shown that the derogation might cause serious injury to the Community industry. 54. It is not possible to state on that basis whether the Commission has adopted a materially incorrect decision. The factors concerning competition to which the Com­ mission refers mean that it is not impossible that the Commission was in fact entitled to 52. It cannot be right — nor has it been assume that the derogation would lead to claimed by the Commission — that that serious injury to the Community industry alone should put the onus on the applicant and to refuse the request on those grounds. to prove that the derogation will not cause It would however have been better if the the Community industry serious injury. Commission had linked its observations Quite apart from the obvious difficulty of more clearly to the specific request for a der­ adducing such proof, it is rather for the ogation so that it was made clear that it Commission, which in this case can seek the could in fact lead to serious injury to the support of the Committee on Origin, to Community industry. assess possible injury to the Community. It is therefore clear that the Commission can­ not give as a reason for refusing the request that the applicant has not established that such damage will be no more than minor. The Commission must at least make it seem probable that there is a firm basis for the assumption that such serious injury may result. When this uncertainty as to the tenability of the Commission's reasons for its assessment of the extent to which the derogation might lead to serious injury is regarded in conjunc­ tion with the inadequacy of the statement of reasons previously mentioned —· including 53. In this connection the Commission has in particular the Commission's erroneous referred to the fact that this is a sensitive sec­ assessment of the scale of the processing or tor of products for which the Community working — my conclusion is, though not has adopted anti-dumping measures — without a certain doubt, that there are suffi­ though not for the pre-recorded video- cient grounds for declaring the decision void cassettes in question but for unrecorded as a result of an inadequate statement of the video-cassettes — and that in addition spe­ reasons on which it was based.

— order the Commission to pay the costs of the Kingdom of the Netherlands.

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