C-159/96

PORTUGAL v COMMISSION

OPINION OF ADVOCATE GENERAL SAGGIO delivered on 16 July 1998 *

1. In this action, the Portuguese Republic referred to as 'the Multifibres Agreement'. 1 asks the Court, pursuant to Article 173 of the That agreement entered into force on 1 Jan- EC Treaty, to annul the practice of 'excep- uary 1974 and remained in force through a tional flexibility' measures which it maintains series of extension agreements until 31 the Commission is following in the adminis- December 1994. 2 tration of quantitative limits on importation into the European Community of textile prod- ucts and clothing from non-member coun- tries and, specifically, to annul the Commis- sion's decision to permit quantitative limits on the importation of textile products and clothing from the People's Republic of China to be exceeded for the year 1995. 3. The Multifibres Agreement is designed to 'achieve the expansion of trade, the reduction of barriers to such trade and the progressive liberalisation of world trade in textile prod- I — Legislative background ucts, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets and on individual lines of production in both importing and exporting countries' (Article 1(2)). To that end, the International agreements agreement provides that 'participating coun- tries may, consistendy with the basic objec- tives and principles of this arrangement, con- clude bilateral agreements on mutually acceptable terms in order, on the one hand, to — Multilateral agreements eliminate real risks of market disruption ... in importing countries and disruption to the textile trade of exporting countries, and on the other hand to ensure the expansion and orderly development of trade in textiles and

4. Following the Declaration at Punta del Este of 20 September 1986, international nego- tiations were opened with a view to inte- grating the textiles and clothing sector within the scope of the GATT, thereby implying the application to that sector of the general rules of the GATT and thus the tendency to the opening of national markets. 7. Under Article 2(1) of the ATC, all quan- titative restrictions, such as those provided for in bilateral agreements, were to be noti- fied within 60 days of the entry into force of the ATC to the Textiles Monitoring Body, also established by the ATC. 4 O n the date of entry into force of the W T O Agreement, each 5. O n 15 April 1994, the Final Act of the Member was to integrate into the GATT Uruguay Round was signed at Marrakesh; products of the sector covered by the ATC that act includes the Agreement establishing accounting for not less than 16% of the total the World Trade Organisation and a series of volume of the Member's 1990 imports (Article multilateral commercial agreements annexed 2(6)). The remaining products were to be to the W T O Agreement, including the Agree- integrated in three stages, commencing respec- ment on Textiles and Clothing ('ATC'). The tively on the first day of the 37th month, the Community adhered to the Agreement by first day of the 85th month and, finally, the Council Decision 94/800/EC of 22 December first day of the 121st month following the 1994 concerning the conclusion on behalf of entry into force of the W T O Agreement. At the European Community, as regards matters the beginning of that third phase, 'the textiles within its competence, of the agreements reached in the Uruguay Round multilateral and clothing sector [were to] stand integrated negotiations (1986-1994). 3 into GATT 1994, all restrictions under this Agreement having been eliminated' (Article 2(8), especially subparagraph (c)).

8. Finally, concerning the various flexibility 10. Article 3(1) of the basic agreement pro- provisions, Article 2(16) of the ATC provides: vides for the establishment of a series of 'Flexibility provisions, i. e. swing, carryover quantitative limits on the exportation of tex- and carry forward, applicable to all restric- tile products from China, such limits being tions maintained pursuant to this Article, shall expressly indicated in Annex III to the agree- be the same as those provided for in MFA ment. 6 The importation of those products bilateral agreements for the 12-month period into the Community is subject to a double- prior to the entry into force of the W T O checking system governed by Title III of Agreement. N o quantitative limits shall be Protocol A to the agreement. In particular, placed or maintained on the combined use of the Chinese authorities are to issue export swing, carryover and carry forward.' licences, and the competent Community authorities are to issue the corresponding import authorisations within five working days of the presentation of the original export licence by the importer.

— The agreement between the European Eco- nomic Community and the People's Republic of China

11. Article 5 of the basic agreement also pro- vides for the possibility of 'flexible' applica- tions of the quantitative limits, by providing, inter alia, that in any year advance use may be made of up to 5% of the quantities fixed for the following year, 7% of quantities unused during the previous year may be carried over 9. O n 9 December 1988, pursuant to Article to the current year, and certain transfers 4 of the Multifìbres Agreement, the Commu- between categories of products are authorised nity concluded an agreement on trade in tex- within a limit of 7%. The increase in any cat- tile products ('the basic agreement') with the egory resulting from the application of the People's Republic of China, which was pro- flexibility mechanism may not in any event visionally applied by the Community with exceed 17%. effect from 1 January 1989 by a Council deci- sion of 19 December 1988. 5

12. Where export licences are presented for a 14. The agreement has been extended and greater quantity of goods than indicated in amended several times, both as regards export the respective quotas and resulting from the quantities of the various categories of prod- application of flexibility measures, the Com- ucts and the flexibility percentages. munity authorities may suspend the issue of import authorisations. The Chinese authori- ties are to be immediately informed, thereby setting in motion, under Article 16 of the basic agreement, 7 consultation procedures within the Joint Committee established by the Trade and Economic Cooperation Agree- 15. In particular, the agreement of 8 December ment between the European Economic Com- 1992 fixed the quantitative import limits into munity and the People's Republic of China the Community for 1993, 1994 and 1995 and of 21 May 1985. 8 amended the flexibility percentages laid down in Article 5 of the basic agreement. Under the terms of that amendment, it is possible to use each year between 5% and 2% of the quanti- ties fixed for the following year and the carry forward to the current year of quantities unused in the previous year may be between 7% and 5%. However, in both cases, the maximum percentage cannot be applied until after consulting the Textile Committee, in accordance with the procedure laid down in Article 16(2) of the basic agreement. 13. Finally, Article 20 of the basic agreement fixes its expiry date as 31 December 1992.

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Organisation (point 2(a) of the agreement). governs the procedure for monitoring those The actual application of those coefficients is, imports. however, suspended until such accession.

18. Finally, the agreement of 13 December 20. Under Article 1(1), as amended by Regu- 1995 extended the basic agreement from 1 lation N o 3289/94 of 22 December 1994, 10 January 1996 until 31 December 1998, and the regulation applies to '— imports of textile amended the flexibility coefficients in Article products listed in Annex I, originating in third 5 of the basic agreement. Under the terms of countries with which the Community has that amendment, it is possible to use each concluded bilateral agreements, protocols or year between 2 % and 1% of the quantities other arrangements as listed in Annex II, 11 fixed for the following year and the carry for- — imports of textile products which have not ward to the current year of quantities unused been integrated into the World Trade Organi- in the previous year may be between 5% and sation within the meaning of Article 2.6 of 3 % . However, in both cases, a maximum per- the World Trade Organisation Agreement on centage of, respectively, 5% and 7% may be Textiles and Clothing (ATC) as listed in Annex applied, but only after consulting the Textile X and which originate in third countries, Committee, in accordance with the procedure Members of the W T O as listed in Annex XI.' laid down in Article 16(2) of the basic agree- ment. That agreement also reduces the pos- sibility of applying flexibility measures between the various categories.

received 'confirmation by the Commission (Article 12(3)), and that 'as far as possible, the that there are still quantities available of the Commission shall confirm to the authorities total Community quantitative limits for the the full amount indicated in the requests noti- categories of textile products and for the third fied for each category of products and each countries concerned, for which an importer third country concerned. Notifications pre- or importers have submitted applications' sented by Member States for which no con- (Article 2(2) and (7)). firmation can be given because the amounts requested are no longer available within the Community quantitative limit, will be stored by the Commission in the chronological order in which they have been received and con- firmed in the same order as soon as further amounts become available, for example through the application of flexibilities [pro- vided for] in Article 7. Moreover the Com-

Finally, issuing import authorisations, shall notify the under Article 12(8), the 'Commission may, in Commission of the amounts of the requests accordance with the procedure laid down in for import authorisations, supported by orig- Article 17, take any measure necessary to inal export certificates, which they have implement this Article'. received. By return the Commission shall notify its confirmation that the requested amount(s) of quantities are available for impor- tation in the chronological order in which the

In par- quantitative limits in question. In such cases, ticular, Article 7 provides that, provided they as soon as this level has been reached, the notify the Commission in advance, supplier allocation of the remainder shall be decided non-member countries may proceed directly in accordance with the procedure laid down to make 'transfers between the quantitative in Article 17' (Article 12(1)). Article 12 also limits listed in Annex V' to the extent and provides that, 'unless for imperative technical subject to the conditions stipulated in Annex reasons it is necessary to use other means of VIII. Those flexibility measures may consist communication temporarily', the notifications in the advance use of the quantity determined referred to in the previous paragraphs are to for the following year (for China, that flex- be 'communicated electronically within the ibility is fixed at a maximum percentage of integrated network set up for [that] purpose' 2%), the possibility of carrying forward a

12 — In its new version, Article 8(1) 2nd ( 2 ) as amended by Regu- lation (EC) N o 824/97 of 29 April 1997 (OJ 1997 L 119, p. 1) read as follows: 'Where, under particular circumstances, imports over and above those referred to in Annex V are required in respect of one or more categories of products, additional opportuni- ties for imports during a given quota year may be granted by the Commission in accordance with the procedure laid down in Article 17. Where such additional opportunities are granted following over-licensing by the authorities of a supplier country, this shall be subject to the deduction of an amount corresponding In an emergency, the Commission shall open to the additional amount from the quantitative limit: consultations in the Committee set up in — of one or more categories of products belonging to the same group or subgroup of products for the current Article 17 within five working days following quota year (provided that such an amount docs not exceed 3% of the quantitative limit for the category for receipt of a request from a Member State and which the additional opportunities are granted) shall take a decision within fifteen working and/or — of the same category of products for the following quota days calculated from the same date. year.'

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sions during 1995 allowing the quantitative linking the Chinese and Community systems limits and flexibility system percentages for for transmitting data on the grant of export textile products and clothes from certain non- licences and import authorisations be intensi- member countries, particularly Belarus, China, fied in order to avoid further instances of India, ex-Yugoslavia, Pakistan, Sri Lanka and import quotas into the Community being Vietnam, to be exceeded. 13 exceeded, and proposed collaboration to allow the progressive introduction of a direct link showing instantaneously the data entered into the two systems.

28. Shortly afterwards, by a letter of 4 March 1996 addressed to the Director of Adminis- tration of Foreign Trade at the Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China, the Commis- sion requested that the computer network 30. Also on 5 March 1996, the Commission convened an urgent meeting of the Textile Committee for the following day. The 13 — See Annex I to the application. minutes of the committee's meeting on

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O P I N I O N OF MR SAGGIO — CASE C-159/96

the Commission in its activity monitoring a precedent binding of the Community insti- quantitative limits laid down for the importa- tutions with regard to the determination of tion of textile products. the correct legal basis'. 18 I might add that the possibility of challenging a practice, and thus a series of successive measures, would permit avoidance of the obligation to comply with the time-limit for challenging each measure taken individually, which would clearly infringe the principle of legal certainty. 34. In any event, the inadmissibility of the action for annulment in question is most readily evident, in my view, from the impos- sibility of bringing an action before the Court under Article 173 of the Treaty in order to challenge the legality of a practice of the institutions. It is true that the Commission IV — Substance does not make this plea of inadmissibility until its rejoinder, and without even making any argument in support of it. However, despite the lateness and the general nature of this plea by the defendant, such a plea of inadmissibility remains relevant because it is The pleas on which the challenge is based a matter of public policy and may therefore be examined by the Court of its own motion (Article 92(2) of the Rules of Procedure).

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37. In examining those various pleas, I will expressly envisaged by those provisions. not follow the order in which they were sub- Moreover, given the temporary nature of those mitted by the applicant, since the third and measures, it is hard to see what their impact fourth of them concern the power of the might be, during the ten-year transition period Commission to adopt the contested decision for integrating textile products in the GATT and are therefore closely linked to the first framework, on the process of progressive lib- plea. eralisation of the importation of those prod- ucts into the Community. 19

— Infringement of Regulation N o 3030/93

40. According to the Portuguese Govern- ment, the contested decision could not be based on Article 7 of Regulation N o 3030/93, 38. In its first plea, the Portuguese Republic since that article provides for the possibility begins by arguing that Article 1(7) of Regula- of transfers between the various quotas only tion N o 3030/93, as amended by Regulation 'to the extent and subject to the conditions N o 3289/94, provides for the progressive inte- stipulated in Annex VIII', and thus within gration of textile products into the WTO over the maximum percentage limits laid down for a period of ten years, pursuant to Article 7 of each form of flexibility. the ATC, cited above. In its submission, a decision to grant 'exceptional flexibility' mea- sures is contrary to those provisions, which were adopted in order to implement an agree- ment made by the Community.

42. The Portuguese Government also criti- must therefore be exercised within the limits cises that legal basis, arguing that a decision and upon the conditions defined in the provi- containing 'exceptional flexibility' measures sions which the institution must apply. In cannot be adopted in the context of the issuing accordance with that premiss, therefore, the of export licences by a non-member country Commission could not adopt decisions per- when quotas laid down for importation into mitting the limits to be exceeded, which were the Community have been exceeded. It argues not only devoid of legal basis but also con- in particular that Article 8 of Regulation N o stituted an alteration of the quotas fixed by 3030/93, concerning exceptional measures for the Council. Even applying the theory of authorising the exceeding of quantitative implicit powers to the delegation of power limits, cannot be given a broad interpretation enjoyed by the Commission, the Commis- as that would lead to the recognition of a dis- sion is still required to exercise functions cretionary power in the management of import directly and necessarily linked to the powers quantities fixed in the Council regulation. The expressly allocated to it. 21 Moreover, in the exceeding of the limits authorised in Article context of commercial policy, where the Com- 8 was permitted only in exceptional circum- mission is responsible for the implementation stances, which could certainly not consist in of international undertakings, the exercise of the simple infringement of the limits by a such functions affects not only the interior of non-member country. If Article 8 had per- the Community but also its external relations, mitted authorising the increase of quotas in a with the consequence that the Commission's case such as this, it would also have fixed a power of implementation must necessarily be ceiling for the increase, which is not present. more limited than that provided for in the The Portuguese Government maintains that context of other Community policies, such as that argument is confirmed by the joint dec- agricultural policy for example. laration of the Council and the Commission of 12 March 1993, concerning the Article 8 in question, 20 whereby the 'particular circum- stances' referred to in that article concern 'trade fairs (such as the fairs in Berlin) or ... situations in which the needs of the Commu- nity industry require extra imports'.

Article 12 allowed the Commission, where it That interpretation of Article 8 was con- suspected quotas were being exceeded, to firmed by the new wording of the same article block the automatic issuing of authorisations which, in the second subparagraph, extends once 90% of the quota was reached. More- the concept of special circumstances to situ- over, Article 12(4) and (8), relied on by the ations in which quantitative limits are exceeded Commission as the legal basis for the con- at the time of the issue of the export licences. tested decision, were on the contrary designed to ensure compliance with quantitative limits and not to permit the granting of extra licences. In particular, the rapid solution referred to in Article 12(4) might consist in the annulment of import authorisations or the reinforcing of monitoring mechanisms. 46. The Commission further notes that it is impossible in this case not to take account of the clearly abnormal circumstance that the exceeding of the limits was due to a break- down of the Chinese Administration's com- puter system, which contained data con- cerning the issuing of export licences for textile products, and of die fact that the exceeding of the limits was so sudden that it was impossible to adopt preventive measures.

OPINION OF MR SAGGIO — CASE C-159/96

the non-member country to find a solution to sions of the Treaty (Article 145, third indent the consequences of those limits possibly and Article 155, fourth indent) and their spe- being exceeded by the supplier country. Under cific scope. Article 12(8), that solution included the pos- sibility of authorising extra imports. An act implementing normal flexibility measures could therefore not be the only possible mea- sure, as otherwise Article 12(8) would have no meaning. That interpretation was con- 51. By Regulation N o 3030/93, the Council firmed by the case-law of the Court of Jus- expressly delegated to the Commission cer- tice, whereby the implementing powers del- tain functions concerning the implementation egated by the Council to the Commission of the common commercial policy in the must be interpreted broadly and may thus, in sector of textile imports into Community ter- a case such as the present, constitute an inde- ritory. In particular, and what concerns us pendent instrument of management to be used here, it allocated to the Commission the power as a kind of safety valve. 22 to manage import quotas.

obtained the assent of the Textile Committee 55. Under Article 8 of the regulation, the — that is to say, in accordance with the pro- Council has also conferred upon the Com- cedure laid down in Article 17 of Regulation mission the power, 'where, under particular N o 3030/93 — limit the amount to be allo- circumstances, additional imports are cated to 90% of the quota in question (Article required', to authorise the importation of 12(1)). The notifications for which no confir- quantities higher than those provided for in mation may be given because the quantities the various quotas and the additional quanti- requested are no longer available within the ties authorised under the flexibility mecha- Community quantitative limits are kept in nism in Article 7. The procedure for adopting reserve by the Commission in the chrono- those measures is that of the committee, gov- logical order of their receipt and receive con- erned by Article 17 of the regulation. In par- firmation in the same order as and when new ticular, 'in an emergency, the Commission shall open consultations in the [Textile] Com- quantities become available 'for example mittee ... within five working days following through the application of flexibilities [pro- receipt of a request from a Member State and vided for] in Article 7'. In that event, the shall take a decision within fifteen working Commission immediately contacts the author- days calculated from the same date' (Article ities of the supplier country 'in order to seek 8, second subparagraph). clarification and a rapid solution' (Article 12(4)). Finally, under Article 12(8), the Com- mission may, in accordance with the proce- dure laid down in Article 17, 'take any mea- sure necessary to implement' the powers expressly conferred by Article 12.

57. In this case, contrary to what the Portu- guese Government maintains, I see no obstacle at the interpretation level to recognising the Commission's power to adopt certain deci- sions on 'exceptional flexibility measures'. 59. I have doubts, however, as to the possi- The decisions in question are ones which bility of basing that power on Article 12(4) permit the exceeding not only of the quanti- and (8) of the same regulation, which are tative limits fixed by the Council in the regu- relied upon by the Commission as the legal lation in question, but of the flexibility per- basis for the contested decision. In my opinion, centages in Article 7 of the regulation. Article 12 concerns only the procedure for monitoring compliance 'with quotas and not the possibility of the Commission modifying the amount of those quotas. More precisely, Article 12(4) refers only to contacts with the authorities of the supplier country, where the latter has issued export licences for quotas that are no longer available. Such contacts cannot give rise to agreements with the author- 58. Article 8, concerning 'additional imports', ities of non-member countries, providing for refers expressly, even if only in general terms, quantitative limits fixed by the Council being to decisions containing measures not pro- exceeded, since a delegation of power in that vided for in Article 7, which must necessarily sense cannot be deduced either from the wording of Article 12 or from the system taken as a whole. Similarly, Article 12(8) does 25 — On that point, see the judgments of the Court in Case 23/75 not contain such a delegation, but constitutes Rey Soda v Cassa Conguaglio Zucchero [1975] ECR 1279, a general closing provision which, in my view, paragraph 14; and Case C-303/90 France v Commission [1991] ECR I-5315. As Advocate General Tesauro righdy merely empowers the Commission to adopt pointed out in the latter case, 'provisions for applying a rule measures necessary 'to implement' Article 12, comprise by definition at least a specification of the obliga- tions entailed by the rule and thus a set of detailed rules that i. e. procedural rules concerning the manage- necessarily create a series of specific obligations', but they cannot contain any modification of the basic rules. ment of available quotas.

61. That having been said, it has to be deter- mined what meaning is to be given to the phrase 'particular circumstances' which appears in Article 8. More precisely, it needs to be determined whether, by those words, 63. It now needs to be determined, therefore, the Community legislature intended to refer whether in this case particular circumstances to circumstances of an exceptional nature, exist within the meaning given, that is to say thereby implying that the provision in ques- circumstances such as to justify authorisation tion could not be widely interpreted. for the issuing of extra import licences. In other words, it needs to be determined whether the issuing of an excessive number of export licences by a supplier country, the People's Republic of China, following a breakdown in that country's computer system, constitutes one of the 'particular circumstances' referred 62. In that respect, there can be no doubt to in Article 8 of Regulation N o 3030/93. My that the rule in question concerns the adop- answer to that question is in the negative, for tion of exceptional measures. By permitting a number of reasons. quotas to be exceeded in the importation of textile products, it constitutes a derogation from what is laid down by the whole of the system governed by the regulation. The excep- tional character of the provision in question is confirmed by its wording, in that it refers expressly to 'particular circumstances' which justify extra imports in relation to those referred to in Annex V, namely those pro- 64. First, the cause of the breach lies with the vided for by the Council. In that respect, I management of the system by the non-member would also remark that, contrary to the Com- country. It is thus not a case of a contingency mission's observations at the hearing, the outside the mechanism for monitoring inter- modification of Article 8 in Regulation N o national trade in those products, unforesee- 824/97, which introduces into the second able as the Commission maintains, but rather paragraph a number of detailed rules for a risk inherent in the monitoring procedure. authorising extra imports in cases similar to Secondly, the Commission has in no way that with which we are concerned here, does proved that the irregular issuing of licences not prevent the provision being exceptional by the Chinese authorities had immediate and in character, and even confirms it; the Council devastating effects, taking the Commission confined itself to stating certain conditions completely by surprise and leaving it unable and procedural rules applicable to such autho- to adopt appropriate corrective measures to risations and which restrict, not increase, the ensure compliance with the quotas. Finally,

— Infringement of the principle of the allo- cation of powers and balance between the institutions

67. The Portuguese Government argues that, by adopting a decision such as that in this 65. For all those reasons, I consider that this case, which authorises 'exceptional flexibility is not a case of 'particular circumstances' measures', the Commission has infringed the which were alone capable of justifying the principle of the attribution of powers con- authorisation of extra imports for the pur- tained in Article 4(1) of the Treaty, in that it poses of Article 8, and that the Commission exercised functions not falling within the did not therefore have the power to adopt the powers conferred upon it by the Treaty or by contested decision. secondary law. In the Government's submis- sion, that principle does not allow the Com- munity institutions to exercise functions out- 26 — Such a procedure, which provides for the suspension of the side the sphere of their competence, even issuing of import authorisations and for contacts with the where they consider those functions to be authorities of the supplier country, is also provided for in the agreement between the European Economic Community necessary to achieve priority aims of Com- and China (Article 13(1) of Protocol A annexed to the basic agreement). munity policies.

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70. I agree with the Commission's view on that point. Those two pleas, based on infringe- ment of the principles of the allocation of powers and institutional balance, are really 73. In this case, therefore, once it has been concerned in this case with the Commission's held that the conditions for authorising extra non-compliance with the provisions allocating imports from the People's Republic of China to it the power to adopt the contested deci- have not been met, and the Commission did sion. In my opinion, therefore, any examina- not therefore have the power to adopt the tion as to whether they are well founded must contested decision, it follows that there has be regarded as part of the examination con- also been an infringement of the two prin- cerning the infringement of Regulation N o ciples invoked, namely that of the allocation 3030/93. of powers and that of institutional balance.

27 — I refer in that respect to the case-law of the Court con- cerning the obligation to consult the Parliament in the leg- islative procedure, which is to be regarded, in the cases pro- 71. Concerning in particular the failure to vided for by the Treaty, as 'an essential formal requirement breach of which renders the measure concerned void', since comply with the principle of the allocation of effective participation of the Parliament in the legislative powers, I would therefore merely refer to my process is regarded as 'an essential factor in the institutional balance intended by the Treaty': see, inter alia. Case C-392/95 observations above on the infringement of Parliament v Council [1997] ECR I-3213, paragraph 14).

— Infringement of the agreement between the Community measure permitting the the European Community and the People's importation of a higher quantity of Chinese Republic of China textile products into the Community than determined in the agreement with the sup- plier country and, on the other, that agree- ment, it might reasonably be thought that a unilateral measure by the Community, intended to favour the non-member country while drawing its inspiration from the liber- 74. According to the Portuguese Govern- alisation aim inherent in the agreement on ment, the contested decision is incompatible trade in textile products, does not infringe with the agreement between the European any provision of that agreement. Economic Community and the People's Republic of China on trade in textile prod- ucts not only because it exceeded the limits expressly laid down by that agreement as regards the possibility of making advance use of quantities fixed for the following years, 28 77. In reality, in this case, the international but also because it is contrary to the logic agreement becomes an instrument for mea- that motivated the Council when it concluded suring the legality of the measure in relation the various extension agreements; those agree- to its internal effects for the Community, that ments, on the Portuguese Government's inter- is to say its effects in relation to the Member pretation, comprised the progressive reduc- States who are also addressees of the con- tion of the annual rate of growth of quantities tested decision. That type of analysis is clearly importable into the Community and a gen- unavoidable, since the Member States have eral reduction of flexibility percentages. not participated — save in an entirely indirect manner by means of the committee proce- dure under Article 17 of Regulation N o 3030/93 — in the decision-making process for the measure in question. In that case, a decision of the Council granting the People's Republic of China — by means of a unilateral 75. In the final analysis, that plea also amounts measure or an agreement with that country to a complaint concerning non-compliance — the possibility of exporting into the Com- with the competence allocated to the Com- munity the quantities authorised in this case mission for adopting a commercial policy by the Commission, becomes a commercial measure such as that in this case. policy measure independent of the agreement with China, and thus a source of law not sub- ordinate to that agreement.

under Article 113, and also concerns the scope 81. In my opinion, this plea is unfounded. As of that delegation. For an examination of that the Commission has rightly argued, a provi- point, I refer to my observations on the first sion such as the one in this case, which fixes plea, especially in points 50 to 66. import quantities in a general way by cat- egory of products from various supplier coun- tries, cannot be regarded as constituting con- crete and specific expectations on the part of the various traders, capable of founding a legitimate expectation in the provision in force — Infringement of the principle of the not being changed. O n the same point, more- protection of legitimate expectations over, I would refer to the consistent case-law whereby compliance with the principle of the protection of legitimate expectations cannot justify the immutability of a provision, espe- cially in sectors, such as the importation of textiles, where it is necessary to adapt the 79. The Portuguese Government argues rules constantly by reference to changes in finally that there has been an infringement of the economic situation. 29 the principle of the protection of legitimate expectations, with regard both to producers, especially those in the Portuguese textile industry, and to importers of products from other supplier countries, since a decision authorising imports not envisaged in the agree- V — The request that the effects of the ment with the non-member country frus- annulling judgment be limited in time trated expectations based on the provisions of the agreement with China. The fact that such 'exceptional flexibility measures' are frequent does not, the Portuguese Government sub- mits, do anything to diminish their unfore¬ seeability. 82. The Commission pleads in the alterna- tive, in the event that the action should be allowed, that the definitive effects of the con- tested decision be maintained in force, on the ground that temporal limitation of the effects of the judgment would avoid compromising 80. The Commission observes in that respect, the exercise of legal rights which the autho- first, that the Portuguese Government has not risation of extra imports for 1995 may have proved that the contested measure caused created on the part of traders and, moreover, damage to traders in that sector, and, sec- avoid infringing the legitimate expectation ondly, that a well-informed trader could not created, for national authorities in particular, have regarded the contested measure as an by the adoption of the measure and the pre- unforeseeable act. The Commission points sumption of its legality. out in that respect that, according to the case-law of the Court of Justice, traders cannot base their legitimate expectations on the con- tinuance of an existing situation, which is 29 — See, finally, the judgment in Case C-315/96 Lopex Export v HZA Hamburg-Jonas [1998] ECR I-317, paragraphs 28 to liable to change. 30.

— a n n u l t h e decision a d o p t e d b y t h e C o m m i s s i o n following the favourable o p i n i o n of t h e Textile C o m m i t t e e of 6 M a r c h 1996, c o n c e r n i n g the i m p o r t a - t i o n of textile p r o d u c t s originating in t h e P e o p l e ' s R e p u b l i c of C h i n a ;

— reject t h e C o m m i s s i o n ' s application t h a t t h e effects of t h e c o n t e s t e d decision s h o u l d b e declared final p u r s u a n t t o t h e s e c o n d p a r a g r a p h of Article 174 of t h e Treaty;

— o r d e r t h e C o m m i s s i o n t o p a y the costs.

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