C-360/93

OPINION OF MR TESAURO — CASE C-360/93

OPINION OF ADVOCATE GENERAL TESAURO delivered on 23 November 1995 *

1. By this action, the European Parliament is 2. The matter therefore turns essentially on seeking the annulment of Council Decision whether the common commercial policy 93/323/EEC concerning the conclusion of an includes international trade in services. The Agreement in the form of a Memorandum of Court's Opinions 1/94 on the WTO Agree- Understanding between the European Econ- ment 3 and 2/92 on Community participa- omic Community and the United States of tion in the Third Revised Decision of the America on government procurement 1and O E C D on national treatment 4have clarified Council Decision 93/324/EEC concerning to a large extent how the concept employed the extension of the benefit of the provisions in Article 113 is to be understood, what its of Directive 90/531/EEC in respect of the scope should be and whether, and to what United States of America, 2both of 10 May extent, trade in services is covered. In decid- 1993. ing the case before the Court, it will there- fore be necessary to apply the principles set forth in that case-law.

3. For the sake of a proper understanding of the arguments put forward in support of the The Parliament argues that Article 113 of the positions taken up by the parties, it will be E C Treaty alone cannot constitute an appro- necessary briefly to call to mind the purpose priate legal basis for the measures in ques- and content of the decisions contested by the tion, which in essence generally extended to Parliament. US undertakings the benefit of the Commu- nity rules governing public procurement, in particular as regards the provision of ser- vices. The Parliament takes the view that the two decisions should also have been based on the last sentence of Article 57(2), Article 66 and Article 100a, that is to say, they should have been adopted using the cooper- As part of the progressive establishment of ation procedure. the internal market, the Council adopted on 17 September 1990 Directive 90/531/EEC on

6. The Commission shall submit an annual report to the Council (for the first time in the second half of 1991) on progress made in multilateral or bilateral negotiations regard­ ing access for Community undertakings to the markets of third countries in the fields covered by this Directive, on any result which such negotiations may have achieved, and on the implementation in practice of all Pursuant to the principle of Community the agreements which have been concluded. preference, Article 29(2) of that directive provides that any tender made for the award of a supply contract may be rejected where the proportion of the products originating in third countries exceeds 50% of the total value of the products constituting the tender The Council, acting by a qualified majority and Article 29(3) that, in any event, where on a proposal from the Commission, may two or more tenders are equivalent, prefer­ amend the provisions of this Article in the ence is to be given to the tender of Commu­ light of such developments.' nity origin. Those rules, however, are not applicable to products originating in coun­ tries with which the Community has con­ cluded agreements ensuring comparable and effective access for Community undertakings to procurement markets in those countries 4. Pursuant to the GATT and the commit­ (Article 29(1)). ment given under Article 29 of Directive 90/531 /EEC to ensure effective access for Community undertakings to the procure­ 5 — OJ 1990 L 297. p. 1. ment markets of third countries, the

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Article 2(1) commits the Council to affording to suppliers, contractors and service-providers the award procedures of Directives 77/62/EEC, 6 92/50/EEC 7 and Next, the Community and the United States 71/305/EEC 8 as regards procedures for the undertake to carry out a joint study of the award of public contracts whose value economic importance of the public procure- exceeds the thresholds indicated in that pro- ment procedures for goods and services cov- vision. The United States assumed a similar ered by the liberalization measures with a commitment consisting of applying to Euro- view to defining their respective positions in pean undertakings the provisions of the Buy the GATT negotiations on the revision of America Act (Article 2(2)). Article 2(3) the 1979 Multilateral Agreement to which I excepts derogations from measures liberaliz- have already adverted (Article 4). ing procurement procedures which were specified by each party at the time when the Multilateral Agreement on Government Pro-

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PARLIAMENT ν COUNCIL

the Agreement which relate to the procure­ third and fourth recitals in the preamble to ment of services. Decision 95/215/EC:

'Whereas part of the commitments in the Agreement negotiated by the European Community with the United States on gov­ ernment procurement fall within the exclu­ 5. It is also worth mentioning that, under sive jurisdiction of the Community under Article 7(3), the Agreement is to terminate Article 113 of the Treaty; on 30 May 1995 or upon the entry into force of the new Code on Government Procure­ ment which is being negotiated under the auspices of the GATT. Since, as we know, the Multilateral Agreement on Government Procurement annexed to the Agreement establishing the World Trade Organization 11 Whereas, moreover, some of the other com­ will enter into force on 1 January 1996 (Arti­ mitments affect Community rules adopted cle XXIV), the Community and the United on the basis of Articles 57(2), 66 and 100a of States concluded in May this year a new agreement extending the validity of the pre­ the Treaty'. vious Memorandum until that date.

8. Having said that, I do not consider that 9. For its part, the Council contends that a the submissions put forward by the parties, distinction must be made between amending in particular as regards Decision a Community measure and extending its 93/324/EEC, in arguing or disputing that the benefits to subjects other than those initially extension of the benefits of Directive contemplated. Where, as in the case of 90/531/EEC to traders in third countries Decision 93/324/EEC, the latter hypothesis constitute an amendment of that directive are applies, the measure extending the scope of of any great use for the purposes of resolving application of particular rules, in particular the dispute which gave rise to this case. to traders in third countries, is normally a separate measure with aims and content dif­ ferent from those of the measure whose ben­ efits it extends. It may therefore quite well have a different legal basis. In that regard, the Parliament stresses the fact that Decision 93/324/EEC was not adopted in accordance with the ad hoc pro­ cedure laid down by Article 29(6) of the directive for the amendment of Article 29 alone, so as to take account of progress made in negotiations designed to secure access for Community undertakings to pub­ The Council acknowledges that the applica­ lic procurement markets in third countries. tion of that distinction is fraught with con­ In its view, this shows that the agreement siderable difficulties in this case in so far as concluded with the United States committed the provisions of the exclusive sectors direc­ the Community to amending the exclusive tive refer both to possible amendment, for sectors directive in its entirety, and such an which a derived legal basis is laid down (in amendment could have been carried out only Article 29(6)), and to the possible extension pursuant to the same legal bases as the of its benefits, for which, since no derived instrument to be amended. In addition, it legal basis is laid down, any measures can be based only on the relevant provisions of the Treaty (Article 29(1) and (5)). Having said this, it considers that the answer to the ques­ 14 — Case C-70/88 Parliament ν Council (the Chernobyl case) tion as to whether Decision 93/324/EEC [1990] ECR I-2041, paragraph 27. Those conditions are now expressly enshrined in the third paragraph of Article 'amends' or 'extends' has no bearing on its 173(3) as amended by the Maastricht Treaty, which entered into force after the present action was brought. validity. Since its aim is essentially to render

inapplicable to US products the principle of 11. In the final analysis, the real issue is Community preference laid down by Article whether the two decisions could be validly 29 of Directive 90/531/EEC, in the event based on Article 113 alone or whether the that the decision is considered to be an Community competence should be based amendment of the directive, it should be (also) on other provisions of the Treaty. based on the derived legal basis of Article 29(6), whereas if it is construed as extending its benefits, it should be based on Article 113. In both cases, the adoption procedure would be the same: the Council would act by a qualified majority on a proposal from the Commission. In fact, the very conflict between the differ­ ent institutions with regard to extending the sphere of application of Article 113 explains the singular game on the part of the parties which characterizes this dispute, which pre­ viously emerged in the request for an opin­ ion on the WTO Agreement, to which I have already referred. As we know, the Parliament and the Council, respectively the applicant and the defendant in these proceedings, share the view that it is not possible to bring all international economic relations under the common commercial policy. Whilst that pol­ icy should certainly be construed in a broad 10. I do not consider that the solution to the perspective, Article 113, on this view, cannot dispute turns on accepting one or the other constitute the legal basis for the conclusion of the two opposing arguments, which, in of international agreements on, for instance, truth, seem instead to create a species of the free movement of services, at least in so smokescreen camouflaging the real issue far as the services in question are not con­ raised by the Parliament's action. The nected with the supply of goods. derived legal basis laid down by Article 29(6) was not utilized in order to adopt Decision 93/324/EEC and could not have been so uti­ lized, since it is intended to serve as the basis only for amendments of Article 29 itself: that is manifestly not the aim of the contested decision. Furthermore, a decision by which the Council, acting under Article 29(5), Consequently, the Council seeks to show extends the benefits of the exclusive sectors that recourse to Article 113 alone is justified directive to a third country following the in this case inasmuch as the main aim of the conclusion of an agreement which, within Memorandum of Understanding concluded the meaning of Article 29(1), ensures in the with the United States is to render the prin­ country concerned comparable and effective ciple of Community preference laid down in access for Community undertakings to pub­ Article 29(2) and (3) inapplicable to tenders lic procurement markets, constitutes a sepa­ comprising US products. In its view, that is rate measure having to be adopted on the the only provision of the exclusive sectors basis of the relevant provisions of the Treaty. directive underlying the conflict with the US

authorities which was sought to be settled. content of the contested measures — asks, In contrast, the provisions on trade in ser- pursuant to the third paragraph of Article vices contained in that directive are merely 37 of the Statute of the Court, that the Com- ancillary, whilst the reference to all the Com- mission's intervention should be declared munity directives on public procurement is inadmissible in so far as it is based on designed solely to specify the policy frame- grounds differing from those asserted by the work within which the Agreement is located. Council. This also explains why the Parlia- ment has not taken a view on the Commis- sion's arguments, considering them unrelated to the object of the application, and merely refers to the inconvenient 'conjunction' in that it signed, at the time when the contested decisions were adopted, a joint declaration with the Council, which was annexed to the minutes of the session. In that declaration, 12. As for the Commission, which has inter- the two institutions agreed, first, that the vened in the proceedings in support of the parts of the memorandum concluded with form of order sought by the Council, it the United States relating to services and argues that Article 113 is the correct legal public works were ancillary and, secondly, basis for the contested decisions, but starts that recourse to Article 113 was without from opposing premises. It argues that the prejudice to their respective positions as to evolution of international trade and the the possibility of utilizing that provision in present close connection between trade in future as the legal basis for the conclusion of goods and trade in services makes it neces- agreements on trade in services. sary to include services within the ambit of the common commercial policy in order not to impair the Community's ability to act vis- à-vis its trading partners. Since therefore the provisions of the agreement with the United States on the liberalization of access to pro- curement procedures for services are autono- mous in nature, the Commission concludes that its interpretation of Article 113 is con- sistent with the Court's case-law, which tends to confer a dynamic content on the 14. The objection of inadmissibility raised concept of the common commercial policy. by the Parliament should be rejected. Whilst there is no doubt that the arguments put for- ward by the Commission to the effect that the contested decisions were lawfully adopted on the basis of Article 113 alone are different to or actually at odds with the defendant's, it cannot be denied that the form of order sought by the Commission in its statement in intervention are 'limited to 13. This explains why the Parliament — supporting the submissions of one of the albeit to a large degree using in support of its parties', as is required by Article 37 of the position the same arguments as the Commis- Statute of the Court. It does not seem to me sion, in particular in order to confirm the to be relevant to refer in this connection to correctness of its interpretation of the the precedent of Case C-155/91 Commission

15. Turning to the merits, in the first place I consider it to be hard to argue that Article 113 constitutes the correct legal basis for the To that end, Article 1 opens the Contracting agreement in question in as much as its 'main Parties' public procurement markets in a aim' is claimed to be to render inapplicable way which is no longer limited to the mere the principle of Community preference to acquisition of products and any services US products comprising a tender in a public ancillary to their supply, as was laid down by procurement procedure. In this connection, the 1979 Agreement — which for that very it is worth recalling that, as the Court has reason was concluded on the basis of Article held on several occasions, 16 the choice of the 113 only, without this having given risen to legal basis for a measure may not depend particular difficulties. In contrast, the com­ simply on an institution's conviction as to mitment to ensuring the other party's under­ the objective pursued but must be based on takings access to public contracts on the objective factors which are amenable to judi­ same terms as one's own undertakings — cial review. The aim and content of the meas­ subject to the derogations mentioned at the ure are particularly relevant in this connec­ beginning of these observations — is also tion. extended to the performance of public works and the supply of services.

Lastly, what the Court stated in Opinion 1/94 should be called to mind: only cross- frontier services may be brought within the Consequently, the provisions on services concept of the common commercial policy. have a measure of independence within the Whilst the situation in which the service is context of the agreement and it is impossible rendered by a supplier in one country to a to assert the (purely economic and, more- consumer residing in another is not unlike over, unproven) argument, so as to reduce trade in goods, the same cannot be said of the scope of the commitments undertaken by other modes of supply of services. In partic- the Community, that, in view of the nature ular, the provision of services by a service- of the activities covered by the liberalization provider from one country by virtue of his measures, it would be difficult to imagine US having a commercial presence on the terri- undertakings making tenders in response to tory of another country or through the pres- an invitation to tender or a tender notice ence of natural persons is different. 19 unless they were established in the Commu- nity. If they were, freedom to provide ser- vices would be already guaranteed to them by the Community directives, which apply irrespective of the origin of the capital of companies incorporated under the law of one of the Member States.

Moreover, it was also explained in Opinion 1/94 that 'it is clear from Article 3 of the Treaty, which distinguishes between "a com- mon commercial policy" in paragraph (b) and "measures concerning the entry and 18. Since it is therefore clear that the agree- movement of persons" in paragraph (d), that ment at issue is also aimed at the provision the treatment of nationals of non-member of services — where, of course, the provision countries on crossing the external frontiers is based on a public contract — it follows of Member States cannot be regarded as

21. In the light of the foregoing observations, I therefore p r o p o s e that the C o u r t should:

— annul Council D e c i s i o n 93/323/EEC of 10 M a y 1993 concerning the conclu­ sion of an A g r e e m e n t in the f o r m of a M e m o r a n d u m of U n d e r s t a n d i n g

20 — Ibid., paragraph 46. 21 — Case C-295/90 Parliament ν Council [1992] ECR I-4193, paragraphs 22 to 27. I - 1207

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between the European Economic Community and the United States of Amer- ica on government procurement and Council Decision 93/324/EEC of 10 May 1993 concerning the extension of the benefit of the provisions of Directive 90/531/EEC in respect of the United States of America;

— preserve the effects of the decisions in question;