C-150/94

UNTTED KINGDOM v COUNCIL

OPINION OF ADVOCATE GENERAL LÉGER delivered on 26 September 1996 *

1. This Opinion concerns two related direct Background actions brought by the United Kingdom and the Kingdom of Spain respectively against the Council. In the first case (C-150/94), the United Kingdom asks the Court to annul a provision in Council Regulation (EC) N o 519/94 of 7 March 1994 on common rules for Relevant provisions prior to Regulation No imports from certain third countries and 519/94 repealing Regulations (EEC) Nos 1765/82, 1766/82 and 3420/83. 1 In the second case (C-284/94), the Kingdom of Spain asks the Court to annul Council Regulation (EC) N o 1921/94 of 25 July 1994 amending Regulation (EC) N o 519/94. 2 3. Before Regulation N o 519/94 came into force, imports of products originating in State- trading countries were governed by several Council regulations.

4. Council Regulation (EEC) N o 1766/82 on common rules for imports from the People's Republic of China 3 applied to imports which were not subject to any quantitative restric- tions, without prejudice to any safeguard mea- sures. 2. The two cases concern the rules governing the import arrangements for certain toys from the People's Republic of China (hereinafter 'China'). One questions whether the imposi- tion of Community import quotas is in fact valid. The other challenges a measure increasing existing quotas. 5. Council Regulation (EEC) N o 3420/83 of 14 November 1983 on import arrangements for products originating in State-trading coun-

* Original language: French. 1 — OJ 1994 L 67, p. 89. 2 — OJ 1994 L 198, p. 1. 3 — OJ 1982 L 195, p. 21.

tries, not liberalised at Community level, 4 1985 amending, on account of the accession provided for quantitative restrictions on the of Spain and Portugal, Annexes I and III to importation of numerous products. Under Regulation N o 3420/83 on import arrange- Article 1(1), that regulation was to apply to ments for products originating in State-trading imports of products originating in the coun- countries, not liberalised at Community lev- tries listed in Annex I, which included China. el, 5 also provided for toy quotas to be opened Article 2(1) stated that the putting into free by the Kingdom of Spain as from 1 January circulation of the products listed in Annex 1986. III, including the toys at issue in these pro- ceedings, then classified under tariff heading 97.03, was to be subject to quantitative restric- tions in the Member States as indicated in that annex against those products. Before 1 December of each year, the Council was, in accordance with Article 113 of the E E C 7. Regulation N o 3420/83 was most recently Treaty, to lay down for those products the amended by Council Regulation (EEC) N o import quotas to be opened by the Member 2456/92 of 13 July 1992 fixing the import States for the following year in respect of the quotas to be opened by Member States in various State-trading countries (Article 3(1) respect of State-trading countries in 1992 and of the regulation). If no decision had been amending Regulation (EEC) N o 3420/83. 6 adopted by that date, the existing import That regulation fixed the quotas to be opened quotas were to be extended on a provisional for 1992. With regard to toys from China, basis for the following year (Article 3(2)). Annex VIII provided for quotas for the Fed- Article 4 laid down the conditions on which eral Republic of Germany and the Kingdom the Member States might, in administering of Spain. Article 5 of Regulation N o 2456/92 the import arrangements, adopt measures provided that Article 3(2) of Regulation N o adapting or abolishing quantitative restric- 3420/83, concerning automatic extension of tions. Articles 7 to 10 contained the rules the previous year's quotas, would not be applicable for the purpose of amending the applicable for 1993. According to the fifth import arrangements laid down by the regu- recital in the preamble to the regulation, that lation. derogation was justified by the need to replace, as from 1 January 1993, the system of main- taining imports quotas to be opened purely at national level, by a Community mechanism covering any restrictions remaining on 31 December 1992.

Quota raised by Regulation No 1921/94

10. Regulation N o 519/94, which applies from 15 March 1994, repeals Regulations N o s 1766/82 and 3420/83. 14. Article 1 of Regulation N o 1921/94 increased the quota opened for the period from 15 March to 31 December 1994 for toys falling within H S / C N Code 9503 41 from E C U 158 965 083 to E C U 204 500 000.

11. It applies to imports of products origi- nating in the third countries referred to in Annex I, including China (Article 1(1)).

15. The third recital in the preamble to the regulation explained that the implementation

12. In accordance with Article 1(2), those 7 — Stuffed toys representing animals or non-human creatures imports are to take place freely, without preju- (for example teddy bears). dice to any safeguard measures or the quotas 8 — Other toys representing animals or non-human creatures (for example plastic animals). referred to in Annex II to the regulation 9 — Certain miscellaneous toys (for example toy weapons).

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17. In Case C-150/94, the United Kingdom claims that, pursuant to Article 173 of the EC — reject as inadmissible the new ground of Treaty, the Court should: annulment put forward in paragraphs 16 to 18 of the statement in intervention concerning an alleged infringement of the third paragraph of Article 3b of the Treaty as regards the statement of reasons for the contested measure and, in the alternative, — annul Article 1(2) of Council Regulation reject the new ground of annulment as N o 519/94 in so far as it applies to toys unfounded;

10 — Most recently, Council Regulation (EC) No 752/96 of 22 April 1996 amending Annexes I Iand IIIto Regulation (EC) No 519/94 on common rules for imports from certain third countries (OJ 1996 L 103, p. 1) merged the three quotas — order the United Kingdom to pay the relating to the three categories of toys at issue in these pro- ceedings into a single quota. costs.

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UNITED KINGDOM v COUNCIL

20. The Kingdom of Spain and the Commis- Grounds of annulment relating to Regula- sion have intervened in support of the Council. tion No 519/94 They contend that the application should be dismissed. The Kingdom of Spain has asked for the United Kingdom to be ordered to pay the costs.

24. The United Kingdom puts forward five grounds of annulment alleging:

23. The Commission has intervened in sup- port of the Council and asked for the Kingdom of Spain to be ordered to pay the costs. — breach of the principle of equal treatment.

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25. I shall consider each of those grounds in 28. As a preliminary point, the United turn. Kingdom claims that the magnitude of the restrictions in question is such that they were 'quasi-penal' in nature and for that reason called for very careful scrutiny.

26. In my view, the Court need not consider whether a sixth ground, alleging breach of the principle of the protection of legitimate expec- 29. It goes on to point out that the contested tation, raised for the first time by the United regulation is based on the commercial policy Kingdom in its observations 1 1on the state- provisions of the Treaty, which are intended, ments in intervention submitted by the Fed- in accordance with Article 110 thereof, to eral Republic of Germany and the Kingdom contribute to '... the progressive abolition of of Spain, is well founded. This plea, which restrictions on international trade and the was raised indirectly in the course of argu- lowering of customs barriers'. ments relating to the abovementioned second plea in the application, is inadmissible in accor- dance with Article 42(2) of the Rules of Pro- cedure.

30. The fifth recital in the preamble to the regulation lays down the principle of liberali- sation of imports. The applicant considers that in so far as the quotas constitute an Infringement of Article 190 of the Treaty exception to that principle, it was incumbent on the Council to explain with particular care the reasons for the option it chose.

34. Furthermore, in its view, a defective state- ment of the reasons o n which the measure is based cannot be remedied by the explanation given by the Council in these proceedings concerning the growth of imports from China. It also points out that in its defence, the 32. The United Kingdom cites in particular Council seeks to explain the level of the the judgment in Case 166/78 Italy v Coun- quotas imposed, while the regulation is silent cil, 12 in which the Court held that a specific on this point. statement of reasons must be supplied in sup- port of all the details which might be con- tained in a measure adopted pursuant to an act of general application, if those details do not fall within the general scheme of the mea- sure as a whole. According to the applicant, the quotas are an exception to the general 35. The Federal Republic of Germany adopts scheme in both the contested regulation and the United Kingdom's arguments and claims Regulation N o 3420/83. That exception is of that the obligation to state reasons made it an entirely different nature from the one necessary to do so with respect to the prin- national restriction authorised by the latter ciple of proportionality, which was expressly regulation. It is a wholly new restriction, and introduced in the third paragraph of Article the Council should therefore have explained 3 b of the Treaty, and which requires inter alia why such a departure from Regulation N o the interests of the Member States to be taken 3420/83 was necessary. The obligation to give into consideration. The Council cites Article 37 of the E C Statute of the Court of Justice to challenge the admissibility of that ground, 12 — Case 166/78 Italy v Council [1979] ECR 2575, paragraph 8. which it describes as a new plea.

40. A specific statement of the reasons for particular details in a measure of general appli- 37. In addition, there are several factors to be cation is not necessary provided that those borne in mind. details fall within the general scheme of the measure as a whole, 15 or provided that the regulation itself falls within the general scheme of the body of measures of which it forms part. 16 38. In imposing an obligation to state the reasons on which acts are based, Article 190 of the Treaty is not taking mere formal con- siderations into account but seeks to give an opportunity to the parties of defending their rights, to the Court of exercising its power of review and to Member States and all inter- ested nationals of ascertaining the circum- 41. Moreover, the statement of reasons for a stances in which the institution has applied measure is not required to specify every rel- the Treaty. 13 evant point of fact and law, as it must be con- sidered not only with reference to the wording of the measure but also to its context and the whole body of legal rules governing the matter in question. 17 This is the case where the Member States have been closely associated 39. The scope of the obligation to state rea- with the process of drafting the contested sons depends, however, on the nature of the measure in question. In the case of a measure intended to have general application, such as a regulation, the statement of reasons may be 14 — Case 5/67 Beus v Haupuollamt Minchen [1968] ECR 83, at p. 95. confined to indicating the general situation 15 — Case 80/72 Koninklijke Lassiefabrieken v Hoofdproduktschap which led to its adoption, on the one hand, voor Akkerbouwproduktcn [1973] ECR 635, paragraphs 24 and 25; Case 166/78 Italy v Council, cited above, paragraph and the general objectives which it is intended 8, and Case 37/83 Rewe-Zentrale v Landwirtschaftskammer Rheinland [1984] ECR 1229, paragraph 13. to achieve, on the other. Consequently, it is 16 — Joined Cases 292/81 and 293/81 Société Jean Lion and Others not possible to require that the statement of v Fonds d'Intervention et de Régularisation du Marché du Sucre [1982] ECR 3887, paragraph 19; Case 250/84 Eridania reasons should set out the various facts, often and Others v Cassa Conguaglio Zucchero [1984] ECR 117, paragraph 38; Joined Cases C-63/90 and C-67/90 Portugal very numerous and complex, on the basis of and Spain v Council [1992] ECR 1-5073, paragraph 16, and Case C-353/92 Greece v Comed [1994] ECR I-3411, para- graph 19. 17 — Case C-478/93 Netherlands v Commission [1995] ECR I-3081, paragraph 49 and Case C-466/93 Atlanta Fruch- 13 — Case 24/62 Germany v Commission [1963] ECR 63, at thandelsgeseuschaft and Others v Bundesamt für Ernährung p. 69. und Forstwirtschaft (II) [1995] ECR I-3799, paragraph 16.

18 — Case C-478/93 Netherlands v Commission, cited above, paragraph 50. See also, with regard to a decision, Case 13/72 Netherlands v Commission [1973] ECR 27, paragraph 12, — it states that the liberalisation of imports, and Case 1252/79 Lucchini v Commission [1980] ECR 3753, paragraph 14. namely the absence of any quantitative

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restrictions, must form the starting point Community-wide quotas were chosen (lim- for the Community rules (fifth recital); ited number and sensitivity of the sector con- cerned) and (3) the reason why Community- wide quotas were necessary ('integration of markets', that is to say, absence of border controls within the internal market).

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from having been closely associated with the reasons for the measure. The reasons in dis- process of drafting the regulation. In its appli- pute were already known to the applicant cation, 20 the United Kingdom recalls that when the contested measure was adopted. when the Commission submitted a proposal Consequently, the principle that a defective for a regulation in November 1992, it described statement of reasons cannot be remedied in the Community system it had in mind; fur- the course of proceedings before the Court 24 thermore, in the case of the toys at issue: 'the is not applicable in this case. Commission proposed quantitative restric- tions at the Community level. It sought to justify its proposal by pointing to the signifi- cant share of the Community market held by the Chinese imports, the significant growth in Chinese imports and the existing national restrictions'. 21 Those statements demonstrate that the Commission informed the Council, 50. In the result, it would seem that as regards but also the Member States, that the planned both its wording and the context in which it restrictions would be based in particular on was drafted, Regulation N o 519/94 has largely the position of the Chinese products on the fulfilled the minimum obligation to state rea- Community market and the considerable sons laid down in Beus, cited above. increase in the volume of such imports. Con- sequently, it was in full knowledge of those reasons that, in the first stage of the drafting of the measure, the applicant voiced its oppo- sition to the restrictions on imports proposed by the Commission. 22 It was in the same cir- cumstances that it continued to oppose the 51. That being so, the question arises whether, introduction of Community quotas for toys in the circumstances of this case, a specific when discussions resumed in January 1994. 23 statement of the reasons for all the details in the measure was required in accordance with the case-law referred to in paragraph 40 above. In particular, the point is to determine whether the regulation had to specify all the reasons for the choice and the level of the disputed quotas.

54. Article 113(1) of the Treaty provides that that policy is to be based on uniform prin- ciples, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and 58. Accordingly, the purpose of the commer- measures to protect trade. cial policy provided for by the Treaty in con- junction with the need for restrictions on imports to be effective justified transferring the appraisal of the necessary measures to the Community. To that end, the power of assess- ment had to be concentrated at the level of the institutions at the same time as the per- 55. Since the end of the transitional period, 26 spective for assessing Community interests in the common commercial policy has been the the internal market as a whole had to be wid- responsibility of the Community. ened. The previous existence of one or more national restrictions was not a decisive factor. It was merely one factor among others which had to be taken into account, the most impor- tant being the economic data relating to the entire Community, as known at the date when 56. Since then, national measures of commer- the situation was assessed. cial policy have been permissible only if spe- cifically authorised by the Community. 27

57. The national quantitative restrictions authorised pursuant to Regulation N o 3420/83 59. The general scheme of Regulation N o had their origin in a system based on that 519/94 corresponds therefore to a change in principle. As a result of the imminent intro- the level but not the nature of the previous duction of the internal market, it was in fact scheme. Like the latter, it still displays the features of an instrument of commercial policy. It is the result not of a 'major change of policy' 28 but of the implementation of a 25 — See the end of the first recital in the preamble to the regula- tion. 26 — See the wording of Article 113(1) of the EEC Treaty. 27 — Case 174/84 Bulk Oil v Sun International[1986] ECR 559, paragraph 31. 28 — See paragraph 32 above.

62. Consequently, the Community legisla- 63. My conclusion is not called in question ture was not required to give particular rea- by the United Kingdom's contention that a sons for choosing to restrict imports rather quota, as an exception to the principle of lib- eralisation of imports arising from Article 110 of the Treaty and from the contested regula- tion itself, must be strictly interpreted and 29 — P. Pescatore: 'La Politique Commerciale', Droit des Com- munautés Européennes, Les Novelles, 1969, pp 917, 921. therefore be justified by specific reasons.

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64. It is indeed a principle of substantive law 68. What of the obligation to provide specific that an exception to a rule is to be interpreted reasons in the light of the principle of pro- strictly. However, I cannot endorse the con- portionality which, according to the German clusion drawn by the United Kingdom from Government, has existed since that principle that principle. was incorporated in the third paragraph of Article 3b of the E C Treaty by the Treaty on European Union?

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UNITED KINGDOM y COUNCIL

into consideration when the exercise of its 75. It submits that at the date when the con- discretion by an institution adopting a Com- tested regulation was adopted, the only munity act is reviewed. In the absence of any national restriction on the toys in question express provision in the Treaty, it cannot have was the quota opened by the Kingdom of become mandatory to refer to it in the state- Spain for direct imports from China. It claims ment of reasons required by Article 190 as a that to move from that situation to the situ- result of a new Article 3b being added to the ation prevailing under the regulation consti- Treaty. tutes a fundamental change of position on the part of the Council. The latter has moved from authorising a trade restriction in one Member State to imposing a restriction on all Member States.

73. In the result, the ground of annulment based on Article 190 of the Treaty, as expounded by the applicant and the Federal 76. According to the applicant, the Council Republic of Germany, must be rejected. did so without any information, report or investigation capable of justifying that deci- sion following an assessment of the relevant facts.

Failure to carry out any appreciation of the facts or manifest error of appreciation

77. In the applicant's view, such an assess- ment would have involved consideration inter alia of the following factors:

— more generally, the balancing of the Com- munity's interest in free trade against pro- tectionism. — the impact of the growth of those imports on the Community industry was not con- sidered;

78. The applicant maintains that since the — there was no examination of the size, Council did not address itself to any of those structure, production, production capacity issues, Regulation N o 519/94 should be and profitability of the Community toy annulled for failure to carry out an apprecia- industry or of the Community toy market tion of the facts. If annulment is justified by itself (whether the market is static, a manifest error of appreciation, it is a fortiori expanding or declining). justified by a failure to carry out any appre- ciation at all.

83. In its view, the Council has failed to pro- duce any evidence that it had available to it 79. In the alternative, the United Kingdom any fact other than the growth in imports pleads that there was a manifest error of from China in deciding whether the Commu- appreciation of the facts. nity industry needed protection.

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UNITED KINGDOM v COUNCIL

89. In areas involving appraisal of complex economic situations, the competent institu- tion enjoys a wide measure of discretion. In reviewing the legality of the exercise of such a discretion, the Court must confine itself to examining whether it is vitiated by a manifest error or by a misuse of power or whether the 86. The Federal Republic of Germany con- authority concerned clearly exceeded the siders that the Council committed an error of bounds of its discretion. 31 assessment in omitting to consider Article 110 of the Treaty while maintaining existing restrictions and introducing new ones, con- 31 — Case 29/77 Roquette Frères v France [1977] ECR 1835, para- trary to the general objective laid down in graphs 19 and 20, and Case 98/78 Racke [1979] ECR 69, paragraph 5. See also Case C-1 79/87 Sharp Corporation v that provision of primary law. Council [1992] ECR I-1635, paragraph 58.

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90. More specifically, where the Community and competition policy, entails in practice the legislature is obliged, in connection with the assessment of complex economic situations. adoption of rules, to assess their future effects, Accordingly, the competent institutions enjoy which cannot accurately be foreseen, its assess- a wide measure of discretion in that respect. ment is open to criticism only if it appears manifestly incorrect in the light of the infor- mation available to it at the time of the adop- tion of the rules in question. 32

94. With reference to the United Kingdom's claim to that effect, I acknowledge that a failure to assess the facts, like a manifest error 91. The discretion which the Council has in of assessment, must a fortiori be deemed to assessing a complex economic situation can justify the annulment of a measure. be exercised in relation not only to the nature and scope of the provisions which are to be adopted but also, to a certain extent, to the establishment of the basic facts, in that the Council is free to base its assessment, if nec- essary, on findings of a general nature. 33 95. In the present case, can it be argued that the Council failed to assess the facts?

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

I E / C (%) 21.7 23.6 23.5 23.2 24.7 28.1 29.7 29.3 31.6 38.2

99. During the years 1988 to 1991 alone, the 101. In its defence, 40 the Council describes proportion of the Community market held the growth of imports from China between by extra-Community imports rose from 1988 and 1993 for each of the three categories 29.7% to 38.2%, an increase of 28.6%. 38 of toys in dispute.

100. Table 2 in the N E I study 39 shows that during the period from 1985 to 1991 the 102. The following tables, which are based average annual rate of growth was 10.2%, on those figures, 41 show, product by product whereas the annual rate of growth of extra- and year by year, the rate of growth in imports Community imports came to 18.8%. It con- compared to the previous year, and also the firms the increase in the rate at which they percentage of total imports for which they have penetrated the Community market. account:

36 — Panorama de l'Industrie Communautaire, Commission of 39 — Page 23. the European Communities, 1993 edition. 40 — Paragraph 3.2.3 and Annex I. 37 — Page 23. 41 — These figures which are, with one exception, lower than 38 — See also the following observation in the NEI study (p. 26): those referred to by the United Kingdom with regard to 'Whereas net imports accounted for 15% of apparent con- 1991 to 1993, are not disputed. sumption in 1980, they rose to 38% in 1991.'

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1988 1989 1990 1991 1992 1993

Percentage increase compared +20.25 +12.43 +52.33 +33 +54.67 to previous year 5 64 Percentage of total imports 38 48 2 71 81

Other toys ( H S / C N Code 9503 90)

1988 1989 1990 1991 1992 1993

Percentage increase compared +61.13 +18.39 +41.12 +18.45 +7.64 to previous year

Percentage of total imports 33 45 51 59 66 66

42 — Even while noting that they cover all the toys. 43 — See the NEI study, p. 26.

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109. Consequently, the allegation that there the legislature's ability to adopt Community was a failure to assess the facts cannot be protection measures? upheld.

114. I think not. 110. Did the Council commit a manifest error in assessing the facts?

115. The first paragraph of Article 110 merely expresses an intention, without any time- 111. Is that error a consequence of the Coun- limit, that is to say an objective which the sig- cil's failure to consider Article 110 of the natories express their readiness to pursue: '... Treaty, in disregard of the general objective of Member States aim to contribute, in the liberalisation of trade laid down in that provi- common interest, to the harmonious develop- sion? ment of world trade, the progressive abolition of restrictions on international trade and the lowering of customs barriers'. 44

117. However, I consider that situations as applies to a derogation from an overriding restrictive as those are not the only ones in rule of the Treaty, preclude the adoption of which protective measures may be taken. measures of implementation going beyond the Without prejudice to its international under- bounds of a narrow interpretation, it does takings, 47 and subject inter alia to any mani- not operate in other cases. Where the legisla- fest error, it seems to me that the Community ture's power is not restricted by an overriding is free to assess the trade protection measures rule, it is only subsequently that the principle required by its internal market on the basis of of strict interpretation can be relied on, in international competition data. That assess- connection with the implementation of the ment falls ex hypothesi within the scope of measure which the legislature will enact if, as the common commercial policy provided for in this case, it decides to lay it down embod- in Article 113 of the Treaty. ying a principle and the exceptions to it. Moreover, it will be possible to invoke that rule only until the legislature enacts another measure which, if the Treaty does not pre- clude it altogether, would alter the ambit of the principle by widening the scope of the exceptions.

124. Annex VIII to Regulation N o 2456/92 fixed the quotas to be applied during 1992 by 128. Where an institution, whether the the Federal Republic of Germany and the Council or the Commission, exercises the Kingdom of Spain. powers conferred on it by the Treaty in place of the Member States, the intention expressed is not the direct result of the assessments that the States were able to make, by reference to their national interests alone, before the entry into force or the completion of a common policy. The choices made are, first and fore- 125. Consequently, on 31 December 1992, most, the result of a fresh line of approach to quotas existed in two Member States, one of the problems raised, namely the general Com- which was the Federal Republic of Germany, munity interest, as distinct from the sum of the largest toy producer in the Community, the States' individual interests. The problems according to the applicant. 48 While quotas themselves are analysed in the context of the thus ceased to be applied in Germany on 1 matters of which they form part. Where January 1993, it was primarily in pursuance appropriate, and subject to any manifest error of Regulation N o 2456/92 which had brought of assessment or abuse of powers, they may the automatic extension of the previous year's be included in a compromise measure dic- quotas to an end. tated by the general interest.

129. If the United Kingdom were correct in 126. Secondly, and above all, the United its reasoning, would it not have to be acknowl- Kingdom cannot argue that the legislature edged that the dispute would never have was unable to introduce a Community quota arisen, because quite simply the qualified on the ground that nearly all the Member majority required by Article 113(4) of the States had liberalised imports of the toys in Treaty could not have been secured? Apart question. from the United Kingdom, however, all the other Member States, including the Federal Republic of Germany which has intervened in support of the United Kingdom, voted in 48 — The second largest in 1991, after France, according to the NEI study (p. 24). favour of adopting the regulation.

136. As Emile de Girardin said, 'gouverner, c'est prévoir' (to govern is to look ahead).

132. Furthermore, the applicant's reasoning does not take account of the actual facts of the case.

137. When imports of very competitively priced products amount to two-thirds or even four-fifths of total imports, it is easily fore- seeable that those imports will not only lead to a loss of market share for other Commu- 133. It is based on the mistaken view that the nity imports and/or products but will also economic situation had been frozen, at least exert strong competitive pressure on the price

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levels prevailing on the single market and may 142. I believe that in the areas in which the thus cause damage to the Community industry. Community legislature enjoys a broad discre- tion it must, irrespective of the obligation to give concise reasons for a measure of general application, be able to consider in depth the decisive issues of fact or of law involved as well as the reasoning which led it to adopt 138. The Council cannot be required to the contested measure. supply at the very least, beyond evidence of a risk, or the initial signs, of disturbance, proof of damage which has by and large already been sustained.

140. Finally, care should be taken lest, under cover of an approach which takes a logical argument too far, the burden of proof relating to manifest errors of assessment is surrepti- 145. In connection with its demands for evi- tiously reversed. dence to be adduced, the United Kingdom has not produced any document demon- strating that in assessing the need for Com- munity quotas, the effects of which could not have been foreseen with any degree of cer- tainty, the Council committed a manifest error 141. Is that not the possible outcome of the of assessment in the light of the information United Kingdom's repeated demands that the available to it at the time when it adopted the Council should adduce evidence, down to the regulation. In particular, the documents placed smallest details, of each stage of its reasoning before the Court contain nothing to show and above all of each fact establishing that an that the protective measure adopted was even event had actually occurred rather than that in principle actually harmful to the Commu- a risk had been incurred? nity industry which it was meant to safeguard.

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146. The reports cited by the United Kingdom 149. Accordingly, that claim does not fall to in its application 49 in support of the assertion be considered in connection with this ground. that Community restrictions were not justi- fied on economic grounds are not conclusive. Those reports, which were written in 1989, are based on data relating to 1988 at the latest, a period in which the share of total imports represented by imports from China amounted The arbitrary nature of the quotas to 38% for the first two categories of toys and 3 3 % for the third.

152. The third ground need not therefore be 49 — Paragraphs 2.17 and 2.18. considered separately.

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Breach of the principle of proportionality 157. In the second part, the United Kingdom claims that the Council had considerably increased the degree of protection by reducing trade at Community level by up to 50%. In that respect, a simple Community surveil- lance measure would have been less restric- tive. In any case, the Council has not sup- plied any evidence to explain why it referred 153. This ground of annulment consists of to the level of imports from China in 1991 three parts. rather than 1992 or 1993 when fixing the levels of the quotas.

154. In the first part, the applicant claims that, when introducing Community quotas, the Council did not adopt a measure propor- tionate to the aim pursued, which was limited 158. The second part of this ground should, to protecting the Spanish toy industry. In like the first, be rejected. relation to that objective, the measure adopted was not the least restrictive means necessary. A regional protection measure would have been sufficient.

159. Where the Community legislature has a broad power of assessment, '... the legality of 155. We have seen, however, that the Com- a measure adopted in that sphere can be munity legislature did in fact assess the need affected only if the measure is manifestly for protection against imports from China in inappropriate having regard to the objective terms of the overall trend regarding those which the competent institution is seeking to imports, not only at the level of the Spanish pursue'. 50 The Court's review of proportion- market but also at the level of the Commu- ality 'must be limited ... in particular' where nity market as a whole. 'the Council has to reconcile divergent inter- ests and thus select options within the con- text of the policy choices which are its own responsibility'. 51

162. The Council explains that it pursued the objective of ensuring that the rules applying to the Community's trade with third coun- 165. The United Kingdom, which bears the tries accurately reflected the completion of burden of proof, has adduced no evidence the internal market, whilst taking account of that the level of protection thus chosen by the sensitivity of the Community industry in the legislature was manifestly inappropriate the sector concerned. In setting the quotas at in relation to the objectives pursued. I would the level of imports for 1991, and not at the point out that even while 'other means for substantially lower level of 1990, the Council achieving the desired result were indeed con- strove to find a balance between adequate ceivable, the Court cannot substitute its assess- protection of the sectors of Community ment for that of the Council as to the appro- industry concerned and the need to maintain priateness or otherwise of the measures an acceptable level of trade with China, having regard to the interests of the Community economic sectors involved. 52 — See the tables in section 102 above.

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OPINION OF MR LÉGER — CASES C-150/94 AND C-284/94

adopted by the Community legislature if those whether such discrimination is objectively measures have not been proved to be mani- justified, to establish whether it is strictly festly inappropriate ...'. 53 proportionate to the objective pursued.

166. In the third part of this ground, the Breach of the principle of equal treatment applicant claims that the general extension of the scope and effect of the Spanish restric- tions contrasts with the case-by-case factual investigation required by the regulation before the imposition of surveillance or safeguard measures on liberalised products.

170. The general principle of equal treatment 53 — Case C-280/93 Germany v Council cited above, paragraph 94. precludes in particular comparable situations

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from being treated in a different manner, 173. In practice, a distinction must be drawn unless the difference in treatment is objec- between: tively justified. 54

— the category of toys in respect of which the Council considered it necessary, in the exercise of its wide discretion, to protect 171. In establishing the categories it com- the interests of the Community industry pares, the United Kingdom starts once again on the basis of the situation prevailing at from the mistaken premise that the Council the time when it adopted the regulation; was obliged to consider that the toys in dis- pute had been liberalised de facto on the ground that only one Member State had main- tained national restrictions at the date on which Regulation N o 519/94 was adopted. It seeks to establish that the toys at issue were — and the category of products in respect of in a position comparable to that of the other which the Council considered it possible, products liberalised by the regulation but on the basis of the economic situation as were accorded different treatment without assessed at the same time, to liberalise justification. imports.

174. Those two categories must therefore 172. As I stated when considering the second exist at the date when the contested measure ground, the intention expressed by the Com- was adopted, that is to say at the very time munity legislature is not the direct result of when the economic situation was appraised the assessments that the Member States were for each category by the Community legisla- able to make earlier. 55 In the circumstances ture, and not, as regards the toys at issue, at of this case, those assessments were all the an earlier time when the common commercial less relevant since they had dealt with a situ- policy had not yet been completed. ation which subsequently changed and since, in any event, under Article 113 of the Treaty the Community is free to assess the trade protection measures required by its internal market. 56

— breach of Article 190 of the Treaty;

177. I would note that the legislature was not — breach of the principle of legitimate expec- required to lay down a specific procedure tation. before introducing any new restriction. The legislature could have made provision for such a procedure only in a subsequent measure, in which case it could have applied ex hypothesi only to those products liberalised by Regula- tion N o 519/94.

180. I shall consider each of them in turn. 57 — It would be quite different if the legislature had required a specific procedure to be followed before the subsequent introduction of new restrictions on imports of certain prod- ucts which had previously been liberalised, but had not done so in respect of other products which had also been libera- lised. 58 — See section 168 above.

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Breach of Article 190 of the Treaty Commission, 62 in which the Court held 63 that although, in the context of an initial application for assistance from the European Social Fund for a vocational training pro- gramme, a statement of reasons in summary form satisfies the requirements of Article 190 of the Treaty, when the initial application has 181. The Kingdom of Spain claims that the been approved, the decision reducing the Council has failed to give adequate reasons amount of assistance originally granted entails for the 28.64% increase in the quota appli- more serious consequences for the applicant cable to toys falling under H S / C N Code and must therefore clearly state the grounds 9503 41, even though it represents a 'substan- justifying that reduction. tial adjustment' in relation to Regulation N o 519/94 and there is no indication of any development to justify that adjustment.

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186. The preamble to Regulation N o 1921/94 — in view of this, and without prejudice to contains the following reasons: a review of the situation, the quota in question should be adjusted upwards for the year 1994, in order to ease the transi- tion between the previous import regime and the regime established by Regulation N o 519/94 (fourth recital).

— Regulation N o 519/94 subjected imports of a limited number of products to Com- munity quantitative quotas, owing to the sensitivity of certain sectors of Commu- nity industry (first recital); 187. The regulation contains, therefore, a per- fectly clear description of the overall situa- tion. In particular, it notes the existence of a problem in the transition to the new regime under Regulation N o 519/94 which appeared at the time when that measure entered into force. It necessarily follows from the wording of the recitals in the preamble that the quota — the Council, in setting the level of these set for toys falling under H S / C N Code quotas, strove to find a balance between 9503 41 proved insufficient to satisfy the needs an appropriate level of protection for the of Community traders involved in imports sectors of the Community industry con- during the period from 15 March to 31 cerned and the need to maintain an accept- December 1994, taking into account quite able level of trade with China, taking into clearly the volume of transactions in progress account the various interests involved (sec- and short-term commitments. As the fourth ond recital); recital indicates, the regulation simply 'adjusts' the quota in question for that transitional period only.

did not fully attain as regards the toys in individual(s) specifically affected by that deci- question. sion. That requirement is not to be found in the rules concerning the obligation to give reasons for acts of general application. I would add for the sake of completeness that the statements in Regulation N o 1921/94 to the effect that '... disruptions have occurred in 189. Consequently, the Council did fulfil the trade with the People's Republic of China obligation to state reasons imposed on it by that have affected Community economic sec- the judgment in Bern, cited above. It did not tors involved in the import, marketing and have to provide in addition specific factual processing of ... toys originating in that details justifying the extent of the temporary country and caused economic difficulties' 65 increase in the quota, that is to say the tech- do not constitute 'factual observations'. Those nical choice made. 64 statements clearly imply that the original quota did not enable the needs of traders involved in imports to be satisfied to a suf- ficient extent in 1994.

190. The two judgments specifically relied upon by the Kingdom of Spain are not rel- evant to the circumstances of this case.

Breach of the principle of the protection of legitimate expectation

198. O n that point, I consider that a Member State, as a privileged applicant, may plead a breach of the legitimate expectations of the traders concerned, as it may plead the breach 195. The Kingdom of Spain considers that of any other rule of Community law. It is the Community legislature disregarded the difficult in my view to make a Member State's legitimate expectations entertained by traders right to put forward a particular plea depend regarding the level of protection under Regu- on the existence of a specific interest. Would lation N o 519/94. In its view, the Council such an approach, if applied to other pleas in failed to take account of the position of the law, not be likely to cause awkward and traders concerned who, in the absence of a unnecessary problems in practice? Above all, change in the original circumstances, saw the it would inevitably restrict the scope for status quo established by the earlier regula- review of the legality of a measure. That tion altered in a very short space of time, would be an unfortunate result for natural without reference to any higher public interest. and legal persons, whose access to the Com- According to the applicant, any prudent and munity judicature is limited by Article 173 of well-informed trader cannot be required to the Treaty. foresee a change depriving the previous quota of all substance, barely four months after it was introduced. Finally, it maintains, Regula- tion N o 1921/94 caused serious damage to all Community traders who had terminated or delayed their contracts by reason of the initial regulation. 199. Before I consider this ground of annul- ment, I would note that the burden of proving that it is well founded in the circumstances of the case clearly falls on the applicant. In its pleadings, the latter may not therefore seek to reverse the burden of proof by claiming that the Council should provide all relevant evi- 196. Moreover, it claims that in its defence dence, some of it, moreover, negative. 66 the Council provides no evidence either that the traders had no such expectations or that a higher public interest warranted disregarding those expectations. 66 — Sec section 196 above.

205. It merely adjusted the level of one of the 202. I would observe that the Kingdom of quotas set by Regulation N o 519/94, having Spain does not expressly refer to the position regard to information which came to light of Community producers. when that regulation was brought into opera- tion. 69

67 — Case 52/81 Faust v Commission [1982] ECR 3745, paragraph 69 — For a similar case of amendments to safeguard measures 68 — Sec, by analogy, Case C-350/88 Delacre and Others v Com- within one and the same year, see the Dürbeck judgment, mission [1990] ECR I-395, paragraph 34. cited above, paragraph 36.

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206. The second ground of annulment put 208. Those provisions should be applied to forward by the Kingdom of Spain must there- the two cases under consideration. fore be rejected.

209. In Case C-150/94, the United Kingdom should consequently be ordered to bear, in addition to its own costs, those incurred by Costs the Council, while the Federal Republic of Germany, the Kingdom of Spain and the Commission should as interveners bear their own costs.

(3) T h e Federal R e p u b l i c of G e r m a n y , t h e K i n g d o m of Spain and t h e C o m m i s s i o n are t o bear t h e i r o w n costs.

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UNITED KINGDOM v COUNCIL

In Case C-284/94

(1) The application is dismissed.

(2) The Kingdom of Spain is ordered to pay the costs incurred by the Council, and to bear its own costs.