C-352/96

4. The Community has negotiated -with var- ious non-member countries and has con- cluded agreements with the Commonwealth of Australia and the Kingdom of Thailand in this context. They were approved in Council 2. The regulation was adopted as part of the Decision 95/592/EC of 22 December 1995 implementation by the Community of the concerning the conclusion of the results of results of negotiations conducted pursuant to negotiations with certain third countries under Article XXIV, paragraph 6, of the General GATT Article XXIV: 6 and other related Agreement on Tariffs and Trade (GATT) fol- matters; 3 on the same day the Council adopted lowing the accession of the Austrian Republic, Regulation (EC) N o 3093/95 laying down the the Finnish Republic and the Kingdom of rates of duty to be applied by the Commu- Sweden to the European Community. nity resulting from negotiations under GATT Article XXIV: 6 consequent upon the acces- sion of Austria, Finland and Sweden to the European Union. 4

3. The new members' application of the common customs tariff involved increasing some of their customs duty rates. It was nec- 5. The Council then, on 24 July 1996, adopted essary, therefore, to agree adjustments with Regulation N o 1522/96, which is the subject certain non-member countries which were of the application. Under Article 1(1)(a) of signatories of GATT, pursuant to Article the regulation, an annual tariff quota was XXIV, paragraph 6, and in particular point 5 opened for imports of 63 000 tonnes of of the memorandum of understanding

2 — OJ 1994 L 336, p. 16. * Original language: French. 3 — OJ 1995 L 334, p. 38. 1 — OJ 1996 L 190, p. 1. 4 — OJ 1995 L 334, p. 1.

'Where import licence applications are sub- 2. If either of the criteria set out in the indents mitted in respect of rice and broken rice in paragraph 1 is met, and in particular if the originating in Thailand and rice originating in imports of rice in packages of five kilograms Australia under the arrangements laid down or less exceed the figure of 33 428 tonnes, and in Article 1, they shall be accompanied by in any event on an annual basis, the Commis- export licences completed in accordance with sion shall submit a report to the Council the model set out in Annexes I and II respec- accompanied, if necessary, by appropriate pro- tively and issued by the competent body in posals to avoid disruption of the Community the countries as indicated therein.' rice sector.'

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Grounds for annulment of Articles 3 and 4 of the exporting State's authorities, which grant licences to exporters of their own choosing and which can therefore restrict imports of the product into the Community to their chosen candidates.'

10. The Italian Government believes that Arti- cles 3 and 4 should be declared null and void because they infringe:

13. As far as Australia is concerned, the pro- vision is certainly not justified; unlike the agreement concluded with the Kingdom of — Article XXIV, paragraph 6, of GATT; Thailand, the agreement on the conclusion of the negotiations under Article XXIV, para- graph 6, of GATT and approved by Decision 95/592 contains no clause providing for the automatic grant of import licences on the — Article 43 of the E C Treaty; basis of export licences issued by that State. For this reason, the provision is also contrary to the decision approving the agreement with Australia.

(Austria, Finland and Sweden) to the Euro- 18. In support of this contention it cites the pean Community. O n the contrary, exporters judgment in Case C-280/93 Germany v Coun- from countries outside the EC — already cil, 5 in which the Court drew attention to its allowed under the aforementioned agreements consistent case-law, according to which to export the specified rice quota at zero duty 'GATT, which according to its preamble is into a large-scale customs union, instead of based on the principle of negotiations under- into three small and isolated markets, which taken on "the basis of reciprocity and mutu- is in itself a reasonable balance of the interests ally advantageous arrangements", is charac- of both parties to the negotiations — will be terised by the great flexibility of its provisions in a position to control the export of the agreed tariff quota; this does not appear to be a 'mutually satisfactory' solution within the meaning of Article XXIV, paragraph 6, of GATT.

19. The Court inferred from this that: 'Those features of GATT, from which the Court concluded that an individual within the Com- munity cannot invoke it in a court to chal- lenge the lawfulness of a Community act, also preclude the Court from taking provisions of GATT into consideration to assess the law- fulness of a regulation in an action brought 16. The Italian Government adds that by a Member State under the first paragraph allowing these countries the undue advantage of Article 173 of the Treaty.' mentioned above also appears to infringe the general principal of proportionality and is evidence that the Council has manifestly failed to seek to take a measure which would meet the requirements of the common agricultural policy. 20. However, the applicant points out, rightly, that in the same judgment the Court explained that:

21. The Council objects that this is not the case here. The contested act contains no refer- ence to GATT rules in the strict sense; the regulation was not adopted in application of 24. The applicant states in its reply that if the GATT rules but of a Community agreement Council's contention is accepted, it will be in accordance with them. impossible to evaluate agreements concluded in the context of GATT. This is not the case. There is nothing to prevent a contracting party from deciding that an agreement reached after negotiations under Article XXIV, para- graph 6, of GATT infringes another of its provisions and bringing proceedings to settle 22. Nevertheless I consider that the Commu- disputes. nity intended to give effect to 'a particular obligation entered into within the framework of GATT', namely its obligations arising under agreements with other parties to GATT fol- lowing negotiations concluded on the basis of Article XXIV, paragraph 6, of GATT. 25. By the same token, and subject to the conditions imposed by the Court's case-law, an applicant may allege infringement of other GATT provisions in the context of such an agreement. As the applicant has not alleged infringement of any GATT rule other than Article XXIV, paragraph 6, this argument 23. I therefore consider that in principle there must be rejected. is no reason why the Court should not examine the legality of the contested regulation in the light of GATT 1994. It must be said, how- ever, that the applicant alleges only infringe- ment of Article XXIV, paragraph 6, of GATT and in particular of the memorandum of understanding cited above. The Council is 26. Finally, the Italian Government argues correct, therefore, in pointing out that the that the regulation goes beyond the agree- sole obligation imposed on the contracting ments reached following negotiations within

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32. Objectively, the advantage cannot be — Article 43 of the Treaty; regarded as being so significant that Articles 3 and 4 of the regulation would be dispro- portionate to the aim in view, which was to regulate the management of quotas granted under agreements concluded with the non- — the general principle of proportionality. member countries concerned.

Finally, it entails a misuse of power.

33. For all these reasons I am of the opinion that the applicant has not established that Articles 3 and 4 of Regulation N o 1522/96 infringe Community law. 35. The applicant argues in the first place that the Council has infringed essential procedural requirements because it has not given adequate reasons for the content of the aforementioned Article 9 of the regulation. It takes the view that: Arguments advanced against Article 9

'The Council should have determined the quantity of rice in packets of 5 kilograms or less imported into the new Member States 34. According to the Italian Government, before their accession and should have used Article 9 entails the breach of: this to establish the maximum quantity (not exceeding the above-mentioned quantity) beyond which the Commission would be obliged to intervene to avoid disturbances.

43. The applicant also alleges infringement of Article XXIV, paragraph 6, of GATT, of Article 43 of the Treaty and of the principle 39. It was not obliged to explain, in the of proportionality. In fact, on the assumption recitals, how the figure of 33 428 tonnes in Article 9 was calculated. Had this been so, it would also have been required to provide the 6 — For example, see the judgments in Case C-122/94 Commis- breakdown of the 63 000-tonne quota between sion v Council/[1996] ECR I-881,paragraph 29, Case C-446/93 the USA, Thailand, Australia and the other Atlanta Fruchthandelsgesllschaft [1995] ECR I-3799, para- graph 16, and Case 250/84 Eridania [1986] ECR 117, para- regions as well as for other quotas provided graph 37 and 38.

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48. I agree with this analysis. It is abundantly clear from a reading of the visas and the recitals that the object of the regulation is to implement the agreements concluded in the context of negotiations under Article XXIV, paragraph 6, of GATT, opening the quotas 45. However, I should like to add a few com- required and regulating their management. ments on the principle of proportionality.

49. However, it could be argued that as the 46. The Council is correct in pointing out Council has chosen to establish a guarantee that, in order to establish whether a Commu- such as that in Article 9, it must comply with nity rule meets the principle of proportion- the principle of proportionality and therefore ality, it is necessary to determine whether the it may not be subject to a fixed threshold

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which is disproportionate with regard to the imports even when the quantities imported aim pursued. remain below this threshold.

50. Even if this argument were to be accepted, 52. It also follows that the argument that the the applicant's arguments would still be fac- Council has not taken account of quantities tually unfounded, as the threshold in ques- imported into the new Member States under tion corresponds to the sum of the existing the inward processing arrangements is not imports plus 10%. The level at which it has one which can establish an infringement of been fixed is not therefore disproportionate the principle of proportionality. in relation to traditional trade flows.