C-280/93

2 — The cases in question are Case T-516/93 Pacific Fruit Com- pany, Case T-517/93 Léon van Parijs, Case T-518/93 Anton * Original language: Danish. Dürbeck, Case T-518/93 Comafrica, and Case 1 — OJ1993L 47, p. 1. T-520/93 Pacific Fruit Company Italy.

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4. The Verwaltungsgericht Frankfurt am tively, that there should have been a fresh Main has referred to the Court for a prelim­ consultation of the Parliament and that the inary ruling a number of questions concern­ Council did not comply with the require­ ing the regulation. Such cases include Case ment for a statement of the grounds on C-465/93 Atlanta and Others and Case which the regulation was based. It further C-466/93 Atlanta and Others. The compa­ claims that: nies challenged the regulation before the Ver­ waltungsgericht which, having regard to the judgment of the Court in Zuckerfabrik 3 Siiderdithmarschen, granted provisional measures so that certain of the rules of the regulation regarding trade with third coun­ tries were suspended, with the result that in — Articles 42 and 43 of the EEC Treaty are 1993 the companies were able to import lim­ an insufficient basis for the regulation as ited quantities of bananas outside the tariff 4 it pursues objectives of development pol­ quota. The detailed conditions applying to icy and conflicts with the objectives of such provisional measures are the subject of the agricultural policy referred to in Arti­ the reference in Case C-465/93. In Case cle 39 of the Treaty; C-466/93 the Verwaltungsgericht enquired as to the validity of the regulation since the court has to deal with a number of argu­ ments which are essentially identical with those put forward by the German Govern­ ment in this case. Finally in Case C-389/93 Diirbeck the Verwaltungsgericht has referred to the Court a number of ques­ — the regulation is contrary to the rules of tions on the interpretation inter alia of the the Treaty on competition; provisions of the regulation with regard to the right of so-called 'newcomers' to partic­ ipate in the tariff quota.

7. Such knowledge is particularly necessary for forming an opinion with regard to the factual basis of some of the Federal Repub­ lic's arguments. The Federal Republic has emphatically claimed that: 8. These are therefore disagreements with regard to factors on which, as the Court has consistently held, and as will be mentioned later, the Community legislature must be allowed a broad discretion. The assessment of the legislature may be overruled by the Court only if it is based on a manifestly — the tariff quota introduced by the regula­ incorrect appreciation of the facts or is the tion is fixed too low and will necessarily result of manifestly erroneous assessments. lead, particularly in Germany, to very However, to stress the importance of this considerable reductions of imports and case I must mention here that the German therefore of consumption as compared to arguments to the effect that the legislature imports and consumption prior to the has exceeded even its wide margin of discre­ regulation; and tion seem to me important.

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13. The Member States' consumption of bananas prior to the organization of the mar­ ket was covered by:

11. Bananas can be grown all the year round. They are produced in tropical and subtropical regions (roughly speaking within a zone of some 30 degrees of latitude from the equator). The best growing conditions —• first, bananas produced in the Commu­ are a climate with an average temperature of nity (hereinafter referred to as 'Commu­ some 27° Centigrade and annual precipita­ nity bananas');

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— secondly, bananas produced in some of 17. Income from banana exports frequently the States with which the Community represents for the regions and States con­ has signed the Lomé Convention (herein­ cerned an essential part of their total export after referred to as 'ACP bananas'); earnings 5 and is also very important as regards employment and socially. The pre­ amble to the new regulation stresses:

— thirdly, bananas produced in other States (hereinafter referred to as 'third-country bananas').

18. It is not contested in this case, and it is responsible for the production and market­ of decisive importance for understanding the ing of Latin American bananas, so that these problems facing the Community legislature are also called 'dollar bananas'. Multinational with regard to the adoption of the new orga­ companies handling all stages of production nization of the market, that there are typi­ and distribution, at least up to unloading in cally important differences of price and qual­ the countries of import, still predominate in ity between third country bananas on the trade in Latin American bananas even one hand and ACP and Community bananas though in some of these countries producer on the other. These are due particularly to organizations have been set up to handle differences in climatic and geographical con­ marketing. Because of the costs of transport ditions in the countries of production, to dif­ and ripening Community and ACP bananas ferences in the size of holdings (from several are also to a considerable extent marketed by thousand hectares in certain Central Ameri­ large companies or producer associations. can countries to a few hectares only in the Caribbean islands), to the conditions of pro­ duction and to the treatment of the bananas during transport, and so on. There are usu­ ally considerable differences in the yield per hectare (for example some 40 tonnes in cer­ tain Latin American countries and between 10 and 20 tonnes in ACP countries). Amongst other things this is normally reflected in very considerable differences in selling prices. During the hearing widely 20. Before the new regulation came into varying figures were mentioned, but the force there was no common market for trend is the same, namely that third-country bananas in the Community. In a number of bananas are much cheaper (by up to 100%) countries the market was wholly or partially than ACP bananas, which in turn are some­ reserved for home production or imports what cheaper than Community bananas. 6 from ACP countries or both. That was the position on the markets in the United King­ dom, Spain, France, Greece and Portugal. I shall refer to these markets as closed mar­ kets. The Italian market was originally sup­ plied mainly from Somalia — an ACP coun­ try — but in recent years has mainly been supplied with third-country bananas.

21. The importation of third-country bananas was subject to an import duty, con­ solidated in GATT, of 20% ad valorem. There was however a special duty-free scheme applicable to imports into Germany. 23. The preamble to the Council regulation That scheme was based on a protocol on the common organization of the market annexed to the Implementing Convention in bananas described existing market condi­ referred to in Article 136 of the EC Treaty tions as follows, and at the same time stated relating to the Association of the Overseas why a common organization of the market Countries and Territories with the Commu­ was necessary: nity. According to that protocol a quota was laid down annually within which Germany might import duty-free. If that quota was not enough to cover German consumption and the overseas countries and territories were not in a position to supply the extra German demand, the Member States con­ cerned declared, in paragraph 6 of the proto­ col, 'their readiness to agree to a correspond­ ing increase in the German tariff quota'. It is 'There currently exist within the Member common ground between the parties that the States of the Community producing bananas German Government has always been able national market organizations which seek to to obtain that agreement, the Member States ensure that producers can dispose of their concerned having agreed that it was not pos­ products on the national market and receive sible for German operators to obtain the an income in line with the costs of produc­ supplies required from the overseas countries tion; these national market organizations and territories. impose quantitative restrictions which ham­ per achievement of a single market for bananas; some of the Member States which do not produce bananas provide preferential outlets for bananas from the ACP States while others have liberal importation rules, which even in one case include a privileged tariff situation; these different arrangements 22. These widely differing schemes for the prevent the free movement of bananas within supply of bananas meant that the consump­ the Community and implementation of com­ tion and prices of bananas varied consider­ mon arrangements for trade with third coun­ ably from one Member State to another. tries; for the purposes of achievement of the Thus the average annual consumption in single market, a balanced and flexible com­ Member States with open markets was mon organization of the market for the

'So that the Community can respect Com­ munity Preference and its various interna­ tional obligations, that common organization of the market should permit bananas pro­ duced in the Community and those from the ACP States which are traditional suppliers to 28. The regulation, which was adopted on be disposed of on the Community market the basis of Articles 42 and 43 of the Treaty

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after consultation with the European Parlia­ of aid is justified in the preamble as follows: ment and the Economic and Social Commit­ tee and by the required qualified majority, is divided into five titles. Title I provides for the adoption of common quality and mar­ 7 keting standards, and Title II contains rules on producers' organizations within the Community. These rules are to encourage, for example by assistance for establishment, the formation of such organizations, which are intended to carry out essential tasks, inter 'National market organizations have hitherto alia in connection with the concentration of enabled national banana producers to obtain supply. from the market an adequate income to cover their production costs, since introduc­ tion of the market organization should not place producers in a worse situation than at present, and since it is likely to alter the lev­ els of prices on those markets, provision should be made for compensation to cover 29. Rules on a system of aid for the Com­ the loss of income which may derive from munity's own production are laid down in implementation of the new system so as to Title III. permit the continuation of Community pro­ duction at the costs entailed by the specific structural situation for as long as this remains unadjusted by the structural mea­ sures implemented' (seventh recital).

— an 'average production income' calcu­ 32. The introduction of a system of aid for lated each year from the average price of producers of ACP bananas has been envis­ bananas produced in the Community and aged. In December 1992 the Commission, on marketed, less the average cost of trans­ the basis of Article 113 of the Treaty, submit­ port and delivery. ted a proposal for a regulation containing rules relating partly to technical and financial assistance and partly to income support cor­ responding basically to that implemented for 9 Community producers. The regulation has not yet been adopted. According to informa­ tion supplied, the outcome of this case is awaited before the proposal is further dealt with by the Council. Supplementary aid may be granted in certain special conditions.

The aid is fixed by the Commission before 1 March for the previous year but advances 33. Title IV of the regulation contains rules may be paid out in certain circumstances. for trade with third countries, and, as stated, Compensatory aid may be given only for it is the validity of these rules which is chal­ marketing of up to 854 000 tonnes of lenged by the German Government. bananas and is divided between the various production regions in the manner pre­ 8 scribed.

34. These rules are based, inter alia, on a dis­ Finally Article 13 provides that a premium tinction between traditional ACP bananas shall be granted to producers who cease to and non-traditional ACP bananas. The prow bananas. former are bananas imported from ACP States which traditionally export bananas to the Community, when the import comes 8 — According to Article 12(2) of the regulation the amount is within the quantity laid down in an annex to divided as follows: ' 1.420 000 tonnes for the Canary Islands 2.150 000 tonnes for Guadeloupe 3.219 000 tonnes for Martinique 4. 50 000 tonnes for Madeira, the Azores and the Algarve 5. 15 000 tonnes for Crete and Lakonia.' 9 — OJ 1992 C 344, p. 9.

10 — The annex lays down the following:

'Tonnes/net weight Côte d'Ivoire 155 000 Cameroon 155 000 Surinam 38 000 Somalia 60 000 Jamaica 105 000 Saint Lucia 127 000 Saint Vincent and the Grenadines 82 000 In conjunction with that, Article 18(2) pre­ Dominica 71 000 Belize 40 000 scribes that apart from the quota imports of Cape Verde 4 800 non-traditional ACP bananas are to be sub­ Grenada 14 000 Madagascar 5 900 ject to a levy of ECU 750 per tonne and 857 000' imports of third country bananas to

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ECU 850 per tonne. It is stated in the elev­ ing to Article 20 it is for the Commission to enth recital in the preamble that: draw up the forecast and where appropriate to take the decision to increase the tariff quota, in any case in accordance with the special management committee procedure laid down in Article 27 of the regulation.

'Imports not falling within the tariff quota must be subject to sufficiently high rates of duty to ensure that Community production and traditional ACP quantities are disposed of in acceptable conditions.'

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Article 19(1) lays down the detailed arrange­ It appears from Article 19(2) that each oper­ ments for the allocation: ator, on the basis of separate calculations for group (a) and group (b), is to obtain import licences on the basis of the average quantities of bananas which he has sold in the three most recent years for which figures are avail­ able. It is expressly provided that third coun­ try bananas and/or non-traditional ACP bananas imported on the basis of group (b) 'The tariff quota shall be opened from 1 July licences are not to be taken into account to 1993 for: determine the quantities giving an entitle­ ment to group (a) licences. The more detailed and rather complicated rules for calculating operators' shares are laid down in Commis­ sion Regulation (EEC) No 1442/93 laying down detailed rules for the application of the (a) 66.5% to the category of operators who arrangements for importing bananas into the 1 marketed third-country and/or non- Community. 1 traditional ACP bananas;

40. The distinction between Community bananas and traditional ACP bananas on the one hand and third-country and non- traditional ACP bananas on the other plays a 42. It is common ground that fundamental central role in this case. It may be seen from rights and the principles relied on form an the foregoing that according to the regula­ integral part of Community law and that tion traditional ACP bananas are to a large legal instruments drawn up by the Commu­ extent treated as Community bananas, whilst nity institutions are void if they do not 1 non-traditional ACP bananas are essentially observe such rights and principles. 2 treated as third-country bananas. Since ACP bananas imported into the Community are today in practice only traditional bananas I have thought it justifiable on presentational grounds not to make in every single case the distinction between traditional and non- traditional ACP bananas. I refer to Community/ACP bananas, by which I mean 43. It is also common ground and incontest­ Community and traditional ACP bananas, able that the rules of the regulation and in and I refer to third-country bananas as particular the introduction of the tariff quota meaning third-country and non-traditional and its allocation amongst the various groups ACP bananas. of operators perceptibly affect operators' cir­ cumstances and especially existing patterns of trade for operators on hitherto open mar­ kets.

The arguments relating to the infringement of fundamental rights and general principles of law.

44. I do not think there is any need to make a separate examination of whether the con-

Thus the Court declared in its judgment in 13 Case 265/87 Schräder, at paragraph 15 that: It must be admitted that it seems doubtful whether such interests are included in the scheme of protection of fundamental rights.

'... both the right to property and the free­ 14 — It should be mentioned that in Case C-466/93 Atlanta and Others, previously referred to, the court of reference dom to pursue a trade or profession form accepted that the contested provisions of the regulation part of the general principles of Community 'deprive the operators dealing with third countries of the benefit of the investments they have made in the banana sector', since 'the "withdrawal of quantities devalues the whole of the production apparatus m bananas which they have created over 30 years' and 'the capacities they have built up at all stages of the banana trade by their own 13 — [1989] ECR 2237. investments can no longer be profitably used'.

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However, there is, in my view, no ground for limitation of the existing possibilities of the Court to deal this question. Even if these importation resulting from the establishment interests were to be protected as fundamental of the tariff quota. rights they could be subjected to restrictions and the test of the legality of such restric­ tions would to a considerable extent coincide with and may best be undertaken in the con­ text of the review on the basis of the princi­ ples of equal treatment and proportionality. In any event account must be taken, within 49. Against this the Council has contended the scope of that review, of the nature of the inter alia that the 30% quota is a necessary interests affected. and therefore objective means of attaining one of the essential aims of the regulation, namely the marketing at reasonable prices of Community and ACP bananas.

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tion the burdens must not be disproportion­ sure is manifestly inappropriate having ate as compared with the end sought. regard to the objective which the competent 18 Advocate General Capotorti rightly stressed institution is seeking to pursue'. that 'the principle of proportionality means that the burdens imposed on the persons concerned must not exceed the steps required in order to meet the public interest involved. If, therefore, a measure imposes on certain categories of persons a burden which is in excess of what is necessary — which 53. The Court's review of the correctness of must be appraised in the light of the actual the assessments made by the Community economic and social conditions and having legislature as the basis of the measures regard to the means available — it violates 17 adopted is limited in a case such as this. The the principle of proportionality'. Court has declared:

'...where the Community legislature is 52. It is clear that a wide margin of discre­ obliged, in connection with the adoption of tion has been accorded to the Community rules, to assess their future effects, which legislature in assessing the means to be used cannot be accurately foreseen, its assessment to attain the objectives it seeks. The Court is open to criticism only if it appears mani­ has declared on the subject of its review with festly incorrect in the light of the informa­ regard to the principle of proportionality tion available to it at the time of the adop­ that: tion of the rules in question'. 19

57. The Council has assumed that a tariff quota of 2 m tonnes together with the Com­ munity's own banana production and imports from ACP countries would be suffi­ 55. Before expressing a view on the issue it cient to maintain the current level of con­ is necessary at this point to discuss the dif­ sumption of bananas in the Community. ferences which have appeared between the That idea is presumably expressed in the parties as regards the extent of the interfer­ third recital in the preamble to the regula­ ence. That involves a discussion on the one tion, according to which the objectives of the hand of the ideas of the parties with regard regulation are to be achieved 'without under­ to the question whether the tariff quota fixed mining imports of bananas from other third by the regulation at 2 m tonnes was sufficient country suppliers', and in the tenth recital to cover the consumption in the Community according to which the tariff quota is opened at the time at which the regulation came into to maintain a satisfactory supply of force and on the other hand of the effects on Community/ACP bananas 'while maintain­ trade patterns of the specific rules with ing traditional trade patterns as far as possi­ regard to the allocation of the tariff quota. ble'. The Council confirmed during the oral procedure that the purpose was to maintain current consumption in the Community. The 20 Commission shares that point of view.

The tariff quota

years as representative and as providing the figures for 1992, contend that the tariff quota most correct basis for calculating the imports has been fixed at the correct amount. The use capable of maintaining consumption at the of average figures gives the truest picture of level recorded when the regulation came into expected consumption, partly because the force. original very high consumption in the new German Länder must be expected to fall and partly because the figures for 1992 are artifi­ cially high; operators imported especially large quantities in 1992 in order to put them­ selves in the best starting position for quota allocations when the new organization of the 21 market came into force. 58. The German Government has strongly criticized the amount of the tariff quota, which it thinks will not make it possible to maintain current consumption but on the contrary represents a considerable reduction of current imports and thus of current con­ sumption.

period 1984 to 1991, in thousands of tonnes, into account the consequences of the have been as follows: 1984, 1 821; 1985, expected approximation of prices on the 1 941; 1986, 2 424; 1987, 2 516; 1988, 2 840; closed and open markets. The government 22 1989, 2 974; 1990, 3 330; 1991, 3 629. The claims that experience, including that on the Eurostat figure for 1992 is, as stated, some Italian market, gave reason to expect consid­ 3.8 million tonnes. It seems hard to accept, erable increases in consumption on the hith­ regard being had to this trend, that average erto closed markets. The government has figures for 1989 to 1991 should be used, mentioned that an increase in consumption when it is noted that the 1989 figures do not of only 1 kg per person per year on these include the consumption figures from the markets would entail an increased annual new German Länder. consumption of 230 000 tonnes. It is not impossible that the government may be right as regards this fact. On the other hand the trend of consumption after the organization of the market came into force will depend on how the organization affects the previous market mechanisms. It is an open question, 62. The Council did not have the opportu­ inter alia, whether the approximation of nity to include 1992 consumption in its basis prices — which presumably will take some for establishing the size of the quota. How­ time in any case — will lead to greater ever, the Council should have recognized increases in consumption on the hitherto that the method of calculation used — even closed markets than to reductions on the though the use of average figures may be the hitherto open markets. correct method in other connections — would not produce the truest result. The constant rise in consumption, which accord­ ing to information available might continue, indicated in any case that the 1991 figures should be used as a basis for the calculation. That would have meant that the tariff quota, regard being had to the production of Com­ munity and ACP bananas, should have been between 200 000 and 300 000 tonnes higher.

23 — The Order of the Court, in paragraphs 43, 44 and 45, states as follows in this connection: 68. In accordance with the rules for revision 'The Council admits that the forecasts which it used as its basis may be shown to be incorrect since it has not suffi­ contained in the regulation the tariff quota is cient experience in this field. As the Federal Republic of Germany claims, it is true that the Council envisages the to be evaluated every year on the basis of the possibility of a modification of the quotas laid down in Commission's forecasts. That forecast bal- Article 18 only in the event of a considerable change in the current economic situation. It accepts, however, that the Community institutions are required to act if there should be a shortage of the extent alleged by the Federal Republic of Germany. In that respect it should be pointed out that Article 16(3) of 24 — The German Government has stated that both in October the regulation requires the Community institutions to 1993 and in the spring of 1994 it requested an increase Ín adjust the tariff quota if that proves necessary during the the tariff quota. The first request was not met as the Com­ marketing year, to take account of exceptional circum­ mission thought that the government had not shown the stances affecting in particular import conditions. In such a need for such a step and because the German operators had case the adjustment is to be effected in accordance with the not made a sufficient effort to buy Community and ACP procedure laid down in Article 27, that is, it is for the Com­ bananas. No reply had been received to the second request mission to adopt measures in accordance with the opinion at the time of the hearing. of the Management Committee for Bananas. If the measures It is stated that the tariff quota is expected to be increased adopted are not in accordance with the opinion of the Man­ by 100 000 tonnes in 1994 and by 200 000 tonnes in agement Committee the Council may take a different deci­ 1995 by reason of the outcome of the negotiations which sion within one month. put an end to the disagreement within GATT between the If therefore the Commission were to come to the conclu­ EC and some of the banana-exporting countries in Central sion, on the basis of reliable objective data that the quota and South America. was insufficient to satisfy demand appropriately, and if the 25 — However, by Regulation (EC) No 490/94 (OJ 1994 L 62, Council's earlier estimates were to prove incorrect, the reg­ p . 10) and Regulation (EC) No 3298/93 (OJ 1993 L 296, ulation obliges the Commission and if necessary the Coun­ p . 48) the Commission has created the possibility for total cil to make the necessary adjustments with the possibility imports within the quota of 1 070 000 tonnes for the first for the Member States to make an application to the Court half of 1994. It is not stated what consequences that will if those institutions were not to comply with their obliga­ have for the quantity of imports within the quota for the tions.' two last quarters of the year.

70. The possibility of increasing the tariff quota in accordance with Article 16(3) in the course of the marketing year in exceptional circumstances (for example cyclones in the Caribbean) has scarcely any significance in The forecasts are prepared after the entry connection with this case. into force of the market organization, that is, at a time when the conditions existing when the original quota was established are no 26 — The Commission stated moreover during the oral proce­ longer applicable. In addition, it may be dif­ dure that it had not been in a position to prepare a forecast ficult to discover actual demand on a market for 1994 in pursuance of Article 16 of the regulation because it had come up against fundamental problems and in which the market mechanisms are in any practical difficulties in connection with its preparation.

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72. As mentioned, Article 19 of the regula­ tion provides that the tariff quota shall be so allocated that 66.5% shall go to the operators who marketed third-country and non- traditional ACP bananas, whilst 30% shall go to operators who marketed Community and/or traditional ACP bananas. The remaining 3.5% are to be allocated to so-called 'newcomers'. That means that 1 330 000 tonnes are to be distributed between the traditional dealers in third- country bananas, whereas licences to import 670 000 tonnes of third-country bananas will 74. The government stresses the serious con­ be distributed between operators who have sequences which this transfer from open not previously marketed such bananas. market operators to closed market operators will have, not only for those directly involved but also for other sectors of society (insufficient use of existing port and trans­ port facilities) and for consumers, who will see prices rise by up to 60%. At the same time the government denies that the alloca-

73. The German Government points out that this is a wholly unusual way of allocat­ 27 — See in this connection the tables in Annex 1 to the reply.

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tion of the 30% share to operators other The Council refers in particular to three fac­ than traditional dealers in third-country tors which imply that dealers in third- bananas is necessary to achieve the objectives country bananas should essentially expect to of the regulation, whilst stressing that the be able to maintain their former market provisions of the regulation do not really shares. In the first place the possibility of benefit Community/ACP banana producers importing outside the quota against payment but rather the undertakings which have tra­ of duty of ECU 850 per tonne. Secondly, the ditionally marketed these bananas. possibility of purchasing import licences from operators who have a share of the 30% quota, and thirdly the possibility of purchas­ ing Community/ACP bananas which is also open to traditional dealers in third-country bananas.

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No great weight need be attached to the peting as regards both price and quality with Council's ideas on this point. It seems unten­ third-country bananas to continue to market able to assume that operators will react in Community and ACP bananas. And the the way imagined by the Council. Moreover grant of the right to obtain licences to the Council acknowledged during the oral import third-country bananas gives them an procedure that the rates of duty applied to economic advantage whether they them­ imports outside the quota are prohibitive. It selves use the licences for importing or make therefore appears more correct, as stated by a profit on the sale of the licences. A consid­ the Commission, to assume that importation erable trade in these licences has already outside the tariff quota will take place only been noted — according to the Commis­ in exceptional circumstances and for rather sion's information some 20% of the 30% short periods. quota — and it has been stated by the Ger­ man Government that licences change hands at roughly ECU 450 per tonne.

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80. There is indeed the possibility men­ allocation of licences will for some years to tioned by the Council for the traditional come be quantities for years during which dealers in third-country bananas to buy the traditional dealers in third-country bananas from Community and ACP produc­ bananas were not trading in ers. It is stated that traditional dealers in Community/ACP bananas. Thus the years third-country bananas have managed to 1989 to 1991 served as the basis for the allo­ obtain 20% of the production of the Canary cation of licences for 1993 and according to 29 Islands (some 70 000 tonnes) and 30% of the Article 5(1) of Regulation No 1442/93, it production of the French overseas depart­ will be the import quantities for 1990 to ments (some 95 000 tonnes). However, it is 1992 which are used as the basis for the allo­ probably necessary to agree with the Ger­ cation of licences for 1994. It will thus be man Government that it will not be easy for only in 1997, when licences will be allocated the traditional dealers in third-country on the basis of the import quantities for bananas to gain access in this way to the tra­ 1993 to 1995 that the traditional operators in ditional channels of trade in third-country bananas will be able to partic­ Community/ACP bananas. By reason of the ipate more or less fully in the 30% quota on very considerable stimulus to market the basis of the trade in Community/ACP Community/ACP bananas arising from the bananas which they may have embarked regulation, there will be every possible upon. motive for dealers in those bananas to main­ tain their business connections with the pro­ ducers, built up over decades in strongly protected markets. The German Government claims that it has been genuinely impossible for German firms to obtain imports of Community/ACP bananas in spite of persis­ 28 tent efforts.

Assessment my view to be foreseen that the regulation would lead to perceptible disturbances of trade in the markets which had hitherto been open, such as rising prices, falling turnover with the consequent risk of redundancies, under-utilization of installations both for the 82. The Council and the Commission have firms dealing directly with bananas and those rightly stressed that the new organization of transporting (shipping companies, ports and 31 the market concerns a field to which unusual railways) and ripening bananas. On the circumstances apply and in which there is other hand it is clear that some of these therefore only limited experience from other losses are offset to a certain extent by the organizations of the market on which it is higher banana prices obtainable as a result of possible to rely. The Community legislature the reduction of supply on the hitherto open was faced with a complex task in assessing markets. the future effects of the regulation depending upon a series of factors which it was difficult to foresee, including the reactions of opera­ tors and consumers.

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other hand of markets dominated by com­ lower social cost since in such an organiza­ petitive goods imported without quantitative tion bananas would not rise in price more restrictions. than necessary to finance the aid to the pro­ ducer. The government claims that the solu­ tion chosen means price increases and thus increased expenditure for consumers, consid­ erably greater than the expenditure arising from the system which it proposed.

85. In such a situation it is undoubtedly right that the Court should be cautious in fixing strict limits to the exercise of the leg­ islature's discretion •—• even in a situation in which it is known that the contested regula­ tion was adopted against the views of a minority of Member States and in which it may be regarded as established that that Against that the Council and the Commis­ minority consisted, to some extent, of the sion have contended essentially that such a Member States whose citizens would have to system would be disproportionately expen­ bear an essential part of the burden linked to sive and burdensome for the Community the establishment of that common market. budget and have moreover pointed to the considerable margin of discretion enjoyed by the Community legislature.

88. Since an opinion must be given as to 90. The German Government also claims whether the means specifically chosen are emphatically that the transfer of the 30% unlawful because within the scope of the share of the tariff quota from the traditional present regulation they are formulated in a dealers in third-country bananas to the tradi­ more onerous way than is necessary to attain tional dealers in Community/ACP bananas the aims of the regulation, it should be men­ is unnecessarily onerous because the market­ tioned first that, looked at in isolation, the ing of Community/ACP bananas is already validity of the regulation cannot be affected largely secured by the establishment of the on the ground that it leads to increased tariff quota which compels traders to satisfy prices for the consumer in certain Member current demand in the Community by means States. On the one hand that may be of Community/ACP bananas. regarded as a necessary consequence of the realization of the common market in which it is necessary to offset to a certain extent the hitherto marked differences in price between the open and the closed markets. On the other hand there is in my view no legal pro­ tection in Community law against a rise in consumer prices as in this case if such an increase is needed to secure the marketing of the Community's own products. 91. The Council and those intervening on its behalf contend on the contrary that the tariff quota is not sufficient. The competitive situ­ ation of Community/ACP bananas as against third-country bananas makes it abso­ lutely necessary to ensure their marketing by the offer of a further incentive consisting in the fact that selling them gives a right to a share of the tariff quota for third-country bananas.

the compensation involves a guarantee to the 94. It is hard to follow the Council's argu­ producers that the difference between the ments to the effect that, technically, compen­ price the producers received in the reference satory aid is not of such a nature as to help years and the average price currently to secure the marketing of Community received in the year of sale is made up in full. bananas. The fact that aid is only regarded as If the producer receives a guarantee by temporary does not mean that, as long as it means of compensatory aid, the transfer of exists, it cannot help the marketing of Com­ the 30% quota in fact merely serves to munity bananas, and the fact that it is in enrich the importers who have a share of the principle paid subsequently is no valid argu­ quota. ment either, since the possibility of payment in advance, against a security, is expressly envisaged in Article 12(7) of the regulation. There is, however, one fact which militates against the German Government's claim that the effect of the aid will be that the individ­ ual producer will lose interest in the price he can obtain for his bananas: the aid is paid on the basis of average prices during the year of 93. The Council contends on the contrary sale. The individual producer, to whom other that the purpose of compensation is not to producers' sale prices, and therefore the aver­ be a means for ensuring marketing in the age price arising in the course of the year, are manner referred to by the German Govern­ unknown, will therefore try to obtain the ment but simply to cover differences in price best price possible from purchasers. if they in fact occur. It states that aid under Article 12(1) of the regulation is only intended to offset 'any loss of income'. The Commission expresses this idea by saying that compensatory aid is seen only as a safety net if the other means provided by the regulation are not sufficiently effective.

96. According to the information available there is no doubt that the allocation of the 30% quota to traders in Community/ACP bananas is an effective means of ensuring the marketing of these bananas. It is probable that there will be keen competition to obtain shares in the sale of these products. New 99. To sum up, my view is that there are cir­ purchasers will come on to the market and cumstances which might provide a basis for the traditional purchasers will attempt to declaring the system introduced void. How­ keep their suppliers. There is a considerable ever, such features are not present to such a incentive to do this. The value of shares in manifest and serious extent as to indicate the tariff quota will be considerable, at any that the Council, in choosing the means to rate as long as the quota is kept at a low achieve the purposes of the regulation, has level. In addition, the 30% quota will help to overstepped the limits of its discretionary secure the desired integration of the hitherto powers. The choices of the means applicable separate markets. and their consequences for the distribution of the burdens involved in the implementa­ tion of the internal market with a guarantee for the marketing of Community and ACP bananas lie within the legislature's margin of discretion and are not based upon manifestly incorrect assessments of the assumptions and effects involved in those choices. The legisla­ ture has remained within the limits imposed 97. There is therefore no serious doubt as to upon it according to the case-law of the the suitability of this means for achieving its Court regarding establishment of the factual aim. The question is whether it is excessive. basis of its action and regarding on the one hand the more precise demarcation of the objectives which it is desired to realize within the provisions of the Treaty and on the other hand the choice of the appropriate 32 means.

ment claims that there will be a freezing of the existing division of the market since those who dealt hitherto in Community/ACP bananas will not be 33 — Sec in this respect Regulation No 26 of the Council of the EEC applying certain rules of competition to production of exposed to any competition on their tradi­ and tratfe in agricultural products, OJ, English Special Edi­ tion 1959-1962, p. 129, original reference Journal Officiel tional markets and will therefore be able to 1962 30, p. 993. The purpose of that regulation is not, and could not be, to limit the Council's opportunity, on the adopt an anti-competitive attitude. Accord­ occasion of the organization of markets, for choosing the ing to the German Government competition means for such organizations to select the means judged most appropriate for the attainment of objectives of agricul­ will be excluded for several reasons. The tural policy. government states in particular that dealers 34 — Sec inter alia the judgment in Case 139/79 Maizena [1980] ECR 3393. Paragraph 23 states: in Community/ACP bananas will be able to 'The institution of a system of competition which is not obtain disproportionately high profits distorted is not the only objective referred to in Article 3 of the Treaty which also provides in particular for the adop­ because, at the least, Community producers tion of a common agricultural policy. Those responsible for the Treaty, conscious that the simultaneous pursuit of those on the basis of the compensatory aid intro­ two objectives could sometimes and in certain circum­ stances prove difficult, provided in the first paragraph of duced will sell their bananas at dumping Article 42 that: prices; that it is not possible for traditional "The provisions of the Chapter relating to rules of compe­ tition shall apply to production of and trade in agricultural dealers in third-country bananas to obtain products only to the extent determined by the Council supplies from ACP/Community producers; within the framework of Article 43(2) and (3) and in accor­ dance with the procedure laid down therein, account being and finally that there is no realistic access to taken of the ob|ectives set out in Article 39." That simultaneously recognizes the precedence the agricul­ the market for the so-called newcomers since tural policy has over the aims of the Treaty in relation to their share in the tariff quota is set too low competition and the power of the Council to decide how far the rules on competition should apply to the agricultural — 3.5% of the whole quota, corresponding sector. The Council has a wide discretion in the exercise of that power as it has in the implementation of the whole to 70 000 tonnes out of 2 m tonnes. agricultural policy.'

104. The statement in the preamble of the reasons on which the rules for allocation of the quota are based is laconic. The thirteenth recital on this subject is worded as follows:

103. The German Government claims that the preamble to the regulation does not state the reasons making it necessary to restrict competition in order to achieve the objec­ tives of the regulation, so that the regulation does not comply with the requirements of 'In order to comply with the aims stated Article 190 of the Treaty for a statement of above, while taking into account the special the reasons on which it is based. features of marketing bananas, a distinction must be made when administering the tariff quota between, on the one hand, operators 35 — In Case C-389/93 Diirbeck, mentioned previously, the Court will have the opportunity to decide whether the Commission's rules of implementation as regards arrange­ ments for newcomers comply with the principle of propor­ tionality. As regards the distribution of tariff quotas, see 36 — See inter alia the judgment in Case 125/77 Koninklijke inter alia the judgments in Joined Cases 213 to 215/81 Scholten-Honig [1978] ECR 1991 at paragraph 19. Norddeutsches Vieh- und Fleischkontor Herbert Will [1982] 37 — See inter alia the judgment in Case 87/78 Welding [1978] ECR 3583 and in Case 131/73 Grosoli [1973] ECR 1555. ECR 2457 at paragraph 11.

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who have previously marketed third-country ernment claims that the regulation pursues bananas and non-traditional ACP bananas objectives which conflict with or are not and, on the other, operators who have previ­ covered by those set out in Article 39 and ously marketed bananas produced in the that it makes use of methods which are not Community, ...' appropriate to realize those objectives.

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ticular by increasing the individual earn­ 109. It must first be noted that that part of ings of persons engaged in agriculture; the German Government's arguments in which the government claims that the means employed by the regulation are inappropri­ ate to achieve the objectives set out in Article 39 may be disregarded. Those arguments are identical in essentials with those on which I gave my views in relation to the govern­ (c) to stabilize markets; ment's arguments that the regulation con­ flicted with fundamental rights and generally applicable principles of law.

(d) to ensure the availability of supplies;

110. The German Government claims that guaranteeing Community production and maintaining producers' income are not (e) to ensure that supplies reach consumers amongst the objectives of Article 39 and that at reasonable prices'. the regulation cannot therefore pursue these aims.

112. The government further claims that the regulation does not contribute to an increase in agricultural productivity. That must be rejected, if only because there actually are provisions in the regulation which have that purpose (provisions relating to quality stan­ 114. Finally it is necessary to consider the dards and producers' organizations). In addi­ government's argument that the regulation tion the German Government seems to me does not aim to guarantee supplies and rea­ wrong in maintaining that the compensatory sonable prices for consumers. The govern­ aid deprives the producers of any interest in ment claims that on these two points the reg­ improving their productivity. As I have said, ulation conflicts directly with the objectives the individual producer, quite apart from set out in Article 39. It is understandable that compensatory aid, will have an interest in the government should stress this argument. obtaining the best possible price for his When the regulation was discussed in rela­ bananas and thus also in increasing his pro­ tion to the general principles of law, an ductivity. essential question was whether the regulation pursued other objectives of agricultural pol­ icy too energetically at the expense of market supply and consumer prices. That question has caused me certain difficulties, as will have been seen. On the other hand it seems to me relatively clear that the Council cannot rightly be blamed on the basis of Article 39 of the Treaty for attaching more impor­ 113. As regards the government's argument tance to other objectives than to the two that the regulation does not contribute to

115. The German Government states that a common organization of the market must, according to the second subparagraph of Article 40(3) of the Treaty, be limited to the pursuit of the objectives set out in Article 39 and that Article 43 of the Treaty does not provide a sufficient legal basis for a regula­ tion which pursues objectives of develop­ 117. It would be appropriate for the Court ment policy. The government points to the to declare that the legal basis mentioned is provisions giving bananas produced in ACP sufficient. It is clear that the legal basis for a countries a preferential position as regards common organization of the market for an duty and in particular to the provisions seek­ agricultural product is in principle Article ing in other ways to guarantee markets for 43 and in my view there is no reason to use traditional ACP bananas. The objectives of other legal bases simply because the organi­ the regulation on these points are not only zation of the market, in its rules on the sys- those of commercial policy but those of development policy. The legal basis should therefore have been, apart from Article 43, also Article 235 or 238. In the government's 40 — See in this connection the judgments in Case 68/86 United view the arrangements made are not a mere Kingdom v Council [1988] ECR 855, in Case 131/87 Com- mission v Council [1989] ECR 3743 and in Case compliance with the Community's obliga­ C-155/91 Commission v Council [1993] ECR 1-939.

tions under the Lomé Convention. 41 — See the judgment in Case 45/86 Commission v Council [1987] ECR 1493 at paragraph 20.

118. Before the regulation came into force ACP bananas could be imported into the Community duty-free. According to the reg­ ulation ACP bananas are treated as regards customs duty, as has been mentioned, in such a way that traditional bananas (that is, bananas imported up to the stated limit of 857 000 tonnes) are imported duty-free. (i) those products shall be imported free of Non-traditional bananas are imported within customs duties for which Community the tariff quota duty-free, whilst on importa­ provisions in force at the time of import tion outside the quota a duty of do not provide, apart from customs ECU 750 per tonne is levied. Non- traditional ACP bananas thus receive prefer­ ence as against third-country bananas since 42 — OJ 1991 L 229 p. 3.

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duties, for the application of any mea­ here come under Article 168(2)(a)(ii), since sure relating to their import; the tariff quota scheme cannot be compared to a customs provision but must actually be regarded as a measure 'apart from customs duties ... relating to ... import' within the meaning of point (i). The scheme is therefore covered by point (ii) and meets the require­ ment of that provision that ACP products must be guaranteed 'more favourable treat­ ment than that granted to third countries (ii) for products other than those referred to benefiting from the most-favoured-nation in point (i), the Community shall take clause for the same products'. the necessary measures to ensure more favourable treatment than that granted to third countries benefiting from the most­ favoured-nation clause for the same products.'

'The Community and the ACP States agree to the objectives of improving the conditions under which the ACP States' bananas are produced and marketed and of continuing the advantages enjoyed by traditional suppli- ers in accordance with the undertakings of Article 1 of this protocol and agree that appropriate measures shall be taken for their implementation' (my emphasis).

123. It was stated during the proceedings that the Community had had full consulta­ tion with the ACP States in connection with the adoption of the new organization of the market. Article 1 then provides that:

'In respect of its banana exports to the Com­ munity markets, no ACP State shall be placed, as regards access to its traditional markets and its advantages on those markets, in a less favourable situation than in the past or at present' (my emphasis). 124. In those circumstances my view is that it is not contrary to the Lomé Convention for the organization of the market to draw a distinction between traditional and non- traditional ACP bananas or for non- traditional bananas, with the introduction of An Annex LXXIV containing a joint decla­ the organization of the market, to be less ration is appended to these provisions. The favourably placed as regards duty than hith­ declaration states that: erto.

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They claim that it would create serious diffi­ 43 — Judgments in Joined Cases 21 to 24/72 International Fruit culties for the present attempts to solve Company [1972] ECR 1219, in Case 38/75 Nederlandse within the framework of GATT the prob­ Spoorwegen [1975] ECR 1439, in Case 266/81 SIOT [1983] ECR 731, in Joined Cases 267 to 269/81 SPI and SAMI lems to which the organization of the market [1983] ECR 801, in Joined Cases 290 and 291/81 Singer/Geigy [1983] ECR 847, in Case 70/87 Fediol in bananas and more generally the Lomé [1989] ECR 1781 and in Case C-69/89 Nakajima [1991] Convention have given rise and would more­ ECR 1-2069. 44 — [1989] ECR 1781. over have consequences which it would be 45 — [1991] ECR I-2069. hard to accept if the Court were to agree

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with the Federal Republic that the Commu­ ments. Such legal enforcement is of course nity's legal acts could be reviewed not only possible and will help to secure respect for at international level on the basis of the international obligations, but it will not be in mechanisms laid down in the agreement but itself an infringement of international law if also by the Court on the basis of its indepen­ the contracting parties' legal systems do not dent enforcement of the provisions of the contain rules giving the judicial institutions agreement. jurisdiction for such enforcement.

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130. Where the question of the effects of an case-law to the effect that GATT does not international agreement in the contracting have direct effect. parties' legal systems is not settled in the agreement it is, according to the judgment in the Kupferberg case, a matter 'for decision by the courts having jurisdiction in the mat­ ter, and in particular by the Court of Justice within the framework of its jurisdiction 133. The Court has declared both in cases under the Treaty, in the same manner as any concerning questions relating to the compat­ question of interpretation relating to the ibility of Community legal acts with GATT application of the agreement in the Commu­ and in cases concerning similar questions nity' (paragraph 17). relating to national measures that GATT does not confer on citizens of the Commu­ nity rights which they may invoke before the 49 courts of the Member States.

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may not be relied upon in an application for expressly stated that it had been adopted in a declaration of invalidity under Article order to comply with the GATT rules relied 173 of the Treaty. That view finds support in upon by the applicant. the Court's judgment in Case 50 C-69/89 Nakajima, in which the Court, in an application by an undertaking for a decla­ ration of invalidity under Article 173, was called upon to decide whether an anti­ dumping regulation was unlawful as conflict­ ing with the Community's obligations under GATT, and in which the Council had claimed that the undertaking could not rely 137. It cannot in my view be deduced from upon that argument because the relevant the fact that an international agreement is an GATT rules did not have direct effect. The integral part of the Community legal order Court declared in that connection: that it must necessarily also form part of the legal basis on which the Court will carry out its review of legality under Article 173.

139. In its judgment in Joined Cases 21 to finally, in the event of such suspension, the 24/72 International Fruit Company [1972] power of the party concerned to withdraw ECR 1219 the Court started from the finding from that agreement' (paragraph 25). that it was necessary to examine whether the provisions of GATT 'confer rights on citi­ zens of the Community on which they can rely before the courts in contesting the valid­ ity of a Community measure' and stated that 'for this purpose the spirit, the general scheme and the terms of the General Agree­ ment must be considered'. On that basis the '... where by reason of an obligation assumed Court gave the following reasons for its under the General Agreement or of a conces­ finding that GATT did not have direct effect: sion relating to a benefit, some producers suffer or are threatened with serious damage, Article XIX gives a contracting party power unilaterally to suspend the obligation and to withdraw or modify the concession, either after consulting the contracting parties jointly and failing agreement between the contracting parties concerned, or even, if the 'This agreement which, according to its pre­ matter is urgent and on a temporary basis, amble, is based on the principle of negotia­ without prior consultation' (paragraph 26). tions undertaken on the basis of "reciprocal and mutually advantageous arrangements", is characterized by the great flexibility of its provisions, in particular those conferring the possibility of derogation, the measures to be taken when confronted with exceptional difficulties and the settlement of conflicts between the contracting parties' (paragraph 21). Those paragraphs were repeated in the Court's judgment in Case 9/73 Schlüter [1973] ECR 1135 and there are express refer­ ences to the same reasoning in the judgments in Case 266/81 SIOT [1983] ECR 731 and in Joined Cases 267 to 269/81 SPI and SAMI [1983] ECR 801.

142. It is also clear, according to the case-law of the Court, that the absence of reciprocity as regards other contracting parties' recogni­ 144. The decisive factor for the Court was tion of the internal effects of the agreement the general assessment of GATT. The various will not in itself be any bar to the Commu­ features brought out were evaluated against nity's accepting such internal effects, as may the background of the 'spirit' and 'general be seen from the judgment in the Kupferberg scheme' of the agreement and led, after an case (paragraph 18). assessment of the whole, to a finding that GATT did not have direct effect. It seems to me that it is not justifiable to criticize the Court's reference to the 'flexibility' built into GATT, regard being had to the possibil­ ities for the contracting parties to negotiate exemptions for themselves and by reason of the extensive and to some extent imprecise 143. Furthermore, it is certain, according to saving clauses. Nor is there any reason to the case-law of the Court, that the existence criticize the Court for stressing the special of a special system for the settlement of dis­ rules to be found in GATT for settling dis­ putes within the framework of an interna­ putes, in which connection it may be reason­ tional agreement does not by itself prevent able to have regard to the practice which has the agreement from producing internal developed in respect of that system. In fact the position is that it is to a large extent left

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to the contracting parties to solve their dis­ 145. In these circumstances it is in my view- putes by negotiation. correct that the Court should find that GATT cannot as matters stand be directly invoked in an application for a declaration of invalidity under Article 173 of the Treaty.

'. . . the dispute settlement system as it currently operates can there are special grounds for subjecting the be summarized as follows: Following the inability of two legal acts adopted by the institutions to such contracting parties to resolve a dispute through consulta tions and negotiations, the aggrieved party may request the a review. establishment of a panel to adjudicate the dispute. The request is made to the GATT Council. There is no absolute right to have a panel established, but the 1989 Improve ments provide that if a contracting party so requests, a panel will be established at the second meeting of the Council at which the request appears on the Council's agenda, unless the Council decides otherwise .

In any event, the practice of requiring consensus means that the view as a basis in its two judgments already "losing party" (at least an important losing party) may hold up adoption of a panel report interminably while it pur referred to, namely Fediol and Nakajima. As ports to analyse it and to explore possible negotiated solu I mentioned, the Court was called upon in tions with the prevailing party. . . (p. 68) As it has operated over the years, the GATT dispute settle both cases to decide upon applications by ment system has resembled a judicial system in important aspects: neutral decision-makers have determined whether a legal persons, on the basis of GATT rules, contracting party has violated the General Agreement and for a declaration that Community legal acts have usually recommended that the violation, if one is found, be terminated. Some critics of the system have argued that it should be made more judicial so as to pro mote more precise decisions on the merits of disputes and more effective implementation of decisions.

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were void, and the Court agreed in both plaint lodged under Article 3 of Regulation cases to undertake the review requested by No 2641/84 constitutes an illicit commercial the applicants on the basis of the GATT practice within the meaning of that regula­ rules. tion. The GATT provisions form part of the rules of international law to which Article 2(1) of that regulation refers, as is borne out by the second and fourth recitals in its pre­ amble, read together' (paragraph 19, my emphasis).

147. It is, however, decisive, that in both judgments the Court based that result on the fact that by reason of references to the rele­ vant GATT rules there were special reasons for undertaking such a review. The Court concluded that:

148. In the Fediol judgment the Court first 'It follows that, since Regulation referred to its case-law concerning that fact No 2641/84 entitles the economic agents con- that GATT did not have direct effect and cerned to rely on the GATT provisions in the then declared: complaint which they lodge with the Com­ mission in order to establish the illicit nature of the commercial practices which they con­ sider to have harmed them, those same eco­ nomic agents are entitled to request the Court to exercise its powers of review over 'Nevertheless, it cannot be inferred from the legality of the Commission's decision those judgments that citizens may not, in applying those provisions' (paragraph 22, my proceedings before the Court, rely on the emphasis). provisions of GATT in order to obtain a rul­ ing on whether conduct criticized in a com­

152. The regulation on the common organi­ 'It follows that the new basic regulation, zation of the market in bananas provides in which the applicant has called in question, Article 21(2) that 'the tariff quota laid down was adopted in order to comply with the in the Protocol on the tariff quota for international obligations of the Community, imports of bananas annexed to the Imple­ which, as the Court has consistently held, is menting Convention on the Association for therefore under an obligation to ensure com­ the Overseas Countries and Territories pro­ pliance with the General Agreement and its vided for in Article 136 of the Treaty shall be implementing measures ...' (paragraph 31, discontinued'. my emphasis).

154. The Council and the interveners on its 158. The German Government first claims behalf refer to the fact that the third sub­ that the provision, as an exception to the paragraph of paragraph 4 of the protocol requirement normally applicable as to obser­ states that 'any decision to abolish or amend vance of the procedure for amending the this quota shall be taken by the Council, act­ Treaty, must be strictly interpreted and states ing by a qualified majority on a proposal that that is confirmed by the reasons men­ from the Commission', and claim that that tioned above for the existence of the proto­ provision contains a sufficient legal basis for col. Furthermore, the special legal authority the contested provision of Article 21(2). for abolition, according to its wording, pro­ vides for the possibility of abolishing the tar­ iff quota only for a year at a time and not on a permanent basis as the Council has done, and the provision, according to its wording and its place in the protocol, gives authority to abolish quotas, which are laid down in 155. It is common ground that the protocol pursuance of the second subparagraph of forms part of the Treaty and that it was con­ paragraph 4, that is quotas fixed annually, sidered applicable at the time of the estab­ only when 'imports have decreased in com­ lishment of the organization of the market, parison with those for 1956', which was the even though the implementing convention base year for fixing the quota. The legal basis laid down under Article 136 of the Treaty in for abolition may thus not be used for quo­ relation to the Association for the Overseas tas fixed for years where imports did not Countries and Territories with the Commu­ decrease during the preceding year in com­ nity to which the protocol was annexed is no parison with those for 1956. longer in force.

Paragraphs 1 and 2 of the protocol lay down Any decision to abolish or amend this quota the quota for the period until the common shall be taken by the Council, acting by a customs tariff is fully implemented (90% of qualified majority on a proposal from the the quantities imported in 1956 for the Commission.' period until the end of the second stage and 80% thereof until the end of the third stage). The first subparagraph of paragraph 3 lays down by reference to paragraphs 1 and 2 a rule for increasing the annual quotas for cases in which imports in the preceding year have exceeded 1956 quantities, whilst the second subparagraph lays down a rule for cases in which total imports have fallen in It may be seen that there is to a certain comparison with 1956. extent a parallel between the system of the situations referred to in paragraphs 1 and 2 and that of the system referred to in para­ graph 4 and that the reason for the distinc­ tion between the three periods lies in the dif­ ferences between the guaranteed minimum quantities of the tariff quota.

161. Paragraph 4 of the protocol then pro­ vides as follows:

Moreover it is important in connection with this case that the provision with regard to the abolition of the quota applies only dur­ 'As soon as the common customs tariff ing the period governed by paragraph 4, that applies in its entirety, the quota shall be 75% is, the period after the common customs tar­ of the imports for 1956. This quota shall be iff has been implemented in its entirety. The increased as provided in the first subpara­ possibility thus introduced of abolishing the graph of paragraph 3. quota is therefore linked to the implementa­ tion of the common customs tariff.

(a) Failure to comply with the principle of collegiality as regards the Commission's participation in the decision-making proce- dure 163. On the contrary it is necessary to agree with the Council that such an interpretation of the provision would have presupposed that the opportunity for abolition would have been expressly linked to the second subparagraph of which it would have formed the second part. 165. The German Government points out that Article 43 of the Treaty requires the Council's adoption of decisions to be based on proposals from the Commission and that according to the first paragraph of Article 55 149 of the Treaty the Council may amend a Commission proposal only when it acts by unanimity. The Government claims that the first paragraph of Article 149 was infringed because the Council adopted the contested The words 'this quota' in the third subpara­ regulation by a qualified majority on the graph can only be understood as referring to basis of a proposal which had been amended quotas fixed after the final implementation of otherwise than in the prescribed manner as the customs tariff, whether according to the compared with the Commission's initial pro­ first or the second subparagraph of para­ posal. The member of the Commission who graph 4. took part in the Council's negotiations was not empowered to make the necessary amendments on the Commission's behalf.

164. There is no reason to attach importance The government has stated in its application to the fact that the abolition in pursuance of that there were factors giving grounds for the third subparagraph of paragraph 4 was the belief that the Commission's proposal effected by a general provision which remains in force until it is repealed, with the consequence that the decision on abolition is not adopted every year. 55 — See now Article 189.1(1) of the EC Treaty.

was amended by the member of the Com­ amend the Commission's proposal on the mission with responsibility for agriculture Commission's behalf when he makes such and by the President of the Commission in amendments. disregard of the principle of collegiality and that that belief was strengthened by the information supplied by the Council in its defence with regard to the circumstances relating to the relevant negotiations. The government states that it emerges from the information given by the Council that the 167. The Commission also contends that content of the regulation ultimately adopted that argument is groundless. The Council was the result of a compromise by the Pres­ states that the relevant member of the Com­ idency for which, after lengthy negotiations mission was properly authorized, with due in December 1992, a sufficient majority was respect for the principle of collegiality, to obtained in the Council and that the relevant amend the original Commission proposal. member of the Commission had subse­ The Commission also states that the relevant quently accepted that proposal on behalf of meeting of the Council, extending over sev­ the Commission so that the compromise eral days in December 1992, dealt with sev­ could thus be adopted by a qualified major­ eral important proposals and that the pro­ ity. The government also refers to the fact posal for the banana regulation was only one that during the oral procedure in connection of several for which a sufficient agreement with the application for the adoption of was obtained in the framework of a package interim measures the Council stated that the deal. compromise was the result of a long night meeting and claims that it necessarily follows from that information that the Commission could not have had knowledge of the com­ promise when it gave its mandate to the Commission member concerned in connec­ tion with the relevant negotiations in the The Commission thinks that the German Council and that the member cannot there­ Government's argument may be rejected if fore have been duly authorized. only on the ground that the Commission has stated that its proposal was duly amended and that there are no circumstances which can provide any reason for doubt on the matter.

respects once the Council had discussed it. 1992 — despite its importance — was The Commission then states as follows: only political in nature and the formal decision (the only valid decision in law) was only reached, by a qualified major­ ity, when the Council met on 14 Febru­ ary 1993. The college thus had sufficient time available for a fresh examination of '— It was on that basis that the college of the file and to give the new Member of Commissioners asked the Member with the Commission with responsibility for responsibility for agriculture (at the agriculture (Mr Steichen) special time Mr MacSharry) to conduct negoti­ instructions on the matter or, if need be, ations on the "bananas" issue at the to call into question certain parts of the meeting of the Council of 14 to political compromise; the Commission 17 December 1992 in the context of a did not, however, (either in its previous global compromise. In such a situation, or new composition after 1 January which is by no means unusual, the rele­ 1993) see any reason to re-open the file. vant Member of the Commission remains in close touch with the college in order to seek specific instructions if necessary. That is the only way to achieve a compromise and final decision in such difficult negotiations and is what happens in all the agricultural mara­ — After the formal decision of the Council thons. The Commission is surprised on 14 February 1993, the college of that the applicant — the Government of Commissioners was again informed of a Member State — now seems to wish the results (corresponding to the politi­ to cast doubt on a practice established cal compromise of December) and took for thirty years. note thereof without making any objec­ tions.'

It must be obvious that it cannot be deduced from the wording of Article 190 — the fact that the expression 'proposals' is in the plu­ ral — that there must necessarily be a refer­ ence both to the original Commission pro­ (b) Absence of any reference in the regulation posal and to any subsequent amended adopted to the Commission's final proposal proposal. The interests to be safeguarded by the requirement in Article 190 are in my view quite sufficiently taken into account by a reference to the first of the proposals sub­ mitted by the Commission — particularly when, as is the Commission's practice and as was the position here, it is the one which is 56 published in the Official Journal. 171. The German Government points out that the preamble to the regulation refers only to the Commission's original proposal 56 — The Court rejected a somewhat similar argument in its of August 1992 as published in the Official judgment in Case C-62/88 Greece v Council[1990] ECR I-1527, in which it stated that 'the very terms of that provi­ Journal and hence not to the Commission's sion [Article 190] show that, although it requires a reference to the Commission's proposal in measures winch may be final proposal. The government claims that adopted only on a proposal from the Commission, it does the regulation therefore offends against Arti­ not thereby impose the obligation to indicate whether or not the measure in question is in conformity with that pro­ cle 190 of the Treaty according to which reg­ posal' (paragraph 29).

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GERMANY v COUNCIL

(c) Failure to consult the European Parlia- C-16/92 Driessen that Parliament must be ment again consulted afresh:

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OPINION OF MR GULMANN — CASE C-280/93

178. The first concerns the rules in the orig­ originally suggested, like the provisions of inal proposal regarding the possibilities for the proposal eventually adopted regarding importing third-country and non-traditional the tariff quota, were intended to allow the ACP bananas. That proposal provided in Community to control importation. The Article 17 that imports of these products change in the import arrangements from 'shall be subject to a basic quota of two mil­ being an actual quantitative restriction to lion tonnes and an additional quota which being a tariff quota will hardly have essential shall be fixed each year on the basis of the significance, as will have been clear from the forecast supply balance'. The proposal pro­ discussion of the practical effects of the tariff vided that an ad valorem duty of 20% of the quota. It is moreover not disputed that the value of the goods, consolidated in GATT, change in the basis for the calculation of should be levied upon importation. That duty (within the tariff quota) will in practice proposal, which therefore involved actual lead to minor increases in the burden of duty quantitative restrictions and an ad valorem but they cannot be said to affect the actual duty, was amended to the tariff quota previ­ substance of the proposal. ously described, with a rate of duty of ECU 0 or 100 per tonne within the quota and ECU 750 or 850 per tonne outside the quota.

'Importers who during 1989 to 1991 mar­ keted on their own account a minimum The amended rule has the same purpose as quantity of Community or traditional ACP the original rule and it may be assumed that bananas shall receive on application an the rule originally proposed would in prac­ import licence as provided for in Article tice not have had very different effects from 20(1)0) for a quantity not exceeding the those which the rule finally adopted will average quantity which they marketed dur­ have. ing that period.'

184. The third of the amendments at issue concerns the rules for the so-called newcom­ The proposal eventually adopted changes ers' share of the quota. The original proposal those partnership arrangements into a system reserved 5% of the 70% quota opened for in which the right to receive a share of the dealers in third-country bananas for new 30% quota does not depend upon an the operators marketing bananas for the first obligation to import given quantities of time in the year in question. In addition the Community/ACP bananas but upon having 30% quota was also in principle open to marketed those bananas during the three such operators. The proposal finally preceding years. adopted, as mentioned, opens a special 3.5% quota for newcomers.

182. According to the German Government the rules finally adopted increase the advan­ 185. The German Government claims that tages given to traditional dealers in the proposal eventually adopted makes con­ Community/ACP bananas since it is made siderably worse the newcomers' opportunity more difficult for the traditional dealers in to break into the market and that such third-country bananas to obtain a share of opportunities are essential to ensure effective the quota. competition on the market. The amendments

— order the Federal Republic of Germany to pay the Council's costs, and

— order the interveners to bear their own costs.

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