OPINION OF MRS ADVOCATE GENERAL ROZÈS
DELIVERED ON 25 MARCH 1982 ( 1 )
Mr President,
Members of the Court,
The Bundesverwaltungsgericht [Federal Administrative Court] has requested this Court to give a preliminary ruling on the question whether the Commission was entitled to maintain during the second half of 1976 the protective measures which it had taken in 1974 with regard to the import of preserved mushrooms from nonmember countries or whether, by so doing, it infringed the enabling rules adopted by the Council.
The facts are as follows:
Wünsche, the plaintiff, an undertaking specializing in the import trade, imports in particular preserved mushrooms from nonmember countries. In this case, on 15 July 1976, the Federal Republic of Germany refused, on the basis of the protective measures adopted by the Commission, the licence applied for on 9 July 1976 for the import of 1000 tonnes of preserved mushrooms from Taiwan. Wünsche lodged an objection against that refusal, but its objection was rejected; it then brought an action before the Verwaltungsgericht Frankfurt [Administrative Court, Frankfurt]. However, on the abolition of the protective measures it obtained the necessary import licence. It nevertheless maintained its claim on the ground that the Federal Republic of Germany was obliged to grant its application of 9 July 1976 since, in its opinion, the conditions which had led to the adoption of the protective measures were no longer fulfilled. It based its interest in pursuing its action on the existence of a danger of recurrence.
When its action was dismissed, it lodged an appeal directly before the Bundesverwaltungsgericht [Federal Administrative Court] which confirmed the judgment of the court of first instance so far as admissibility was concerned. On the substance of the claim, after making a detailed analysis of the Community rules, it expressed its doubts as to whether the maintenance of Regulation No 21C7/74 of the Commission of 8 August 1974 could still be justified after the second quarter of 1976.
Because of the complexity of the rules applicable to the case, it appears useful to present a brief review of them before embarking upon a discussion of the case.
1.
The common organization of the market in products processed from fruit and vegetables is governed bv Regulation No 865 of the Council of 28 June 1968, Article 7 of which confers on the Council the power to adopt rules concerning the system of trade with nonmember countries.
(a)
In application of those provisions, the Council adopted Regulation No 1927/75 of 22 July 1975, Article 7 (1) of which provides for the possibility of taking appropriate measures “If, ... the Community market” in a certain number of products processed from fruit and vegetables, including preserved mushrooms, “is or is likely to be exposed to serious disturbances which might endanger the objectives set out in Article 39 of the Treaty”. Those measures “may be applied in trade with third countriesuntil such disturbances or the threat thereof have ceased.” (emphasis added).
(b)
That regulation was supplemented by a second Regulation of the Council of the same date, No 1928/75. Article 1 thereof defines the criteria of which the Commission must take particular account in order to determine whether, at a given moment, the market is experiencing or threatened with the serious disturbances required by Regulation No 1927/75. They are:
(a)
the “volume of imports ... effected or foreseen”;
(b)
the “quantity of products available on the Community market”;
(c)
the “prices for Community products on the Community market or the foreseeable trend of these prices and in particular any ... downward trend thereof in relation to prices in the years immediately preceding”;
(d)
the “prices obtaining on the Community market, at a comparable stage, for products from third countries ...”.
Article 2 (1) defines the protective measures which may be taken for certain products, including preserved mushrooms, which are subject to the system of import certificates. They may be “the rejection of all or some of the applications for the issue of certificates which are being examined” (second indent of Article 2 (1) (a)). Article 2 (2) contains the following rule of proportionality:
“The measures referred to in paragraph (1) may be taken only to such extent and for such length of time as is strictly necessary.”
2.
(a)
Under the powers conferred upon it by the Council in those regulations, the Commission adopted Regulation No 2107/74 of 8 August 1974 laying down protective measures applicable to imports of preserved mushrooms, amended bv another Regulation No 1869/75 of 22 July 1975.
Article 1 (1) of Regulation No 2107/74 institutes a system of impon licences, from 26 August 1974, for all imports into the Community from nonmember countries. The second subparagraph of Article 1 (2), as amended, provides that the licence is to be issued for imports to be effected during the quarter in respect of which it was drawn up; in other words, the impon licences are to be issued in advance and are to be valid for a period of three months.
In Article 2 (2), the Commission is empowered to decide “as provided in Article 3 on the quantities of products for which licences shall be issued”. Anide 3 (1), amended by Regulation No 1869/75, provides that the quantities of products for which licences are to be issued are to be determined by fixing a percentage to be applied to a reference quantity. The latter is defined as the quantity of preserved mushrooms imponed by each applicant into the Community in 1973 during each period indicated in the application.
(b)
In order to implement Regulation No 2107/74, and more precisely Article 2 (2) thereof, the Commission adopted for the second half of 1976, two regulations whereby, for the third and fourth quarters respectively, it decided on the quantities of products for which import licences were to be issued, by fixing a percentage to be applied to each applicant's reference quantity. For the third quarter of 1976, Article 1 of Regulation No 1412/76 of 18 June 1976 released imports up to 70% of the reference quantity. For the fourth quarter of 1976, Regulation No 2284/76 of 21 September 1976 raised the quantity released to 100% of the reference quantity (Article 1 of that regulation).
That system was not abolished until 1 January 1977 as a result of Article 1 of Regulation No 3096/76 of 17 December 1976. That Commission regulation introduced the more flexible system of impon certificates, provided for in Article 4 of Regulation No 1927/75, with effect from 27 December 1976 (Article 2).
It may perhaps be useful to note that in May 1978 a sudden rise in import applications led to new protective measures which are the subject of Case 52/81, Faust v European Economic Community, at present pending before the First Chamber. According to the information provided at the oral hearing, those measures are still in force (report in French, p. 41); the original German text is less precise: it states “Schutz -klausel ... mit langjähriger Anhaltsdauer” [protective clause in force for many years], p. 38).
It is necessary to examine the following point: did the Commission correctly exercise its discretion with regard to the situation on the market in preserved mushrooms?
That examination will cover the four factors listed in Article 1 of Regulation No 1928/75 (situation on the internal Community market and on the import market, in each case in relation both to quantities available and to prices) and will at the same time take into account the requirement of proportionality, laid down in Article 2 (2), between the situation on the market and the severity and duration of the measures taken.
(1)
In its case-law this Court recognizes that the authority entrusted with administering protective measures has a wide discretion. Thus, in its judgment of 7 February 1973 in Case 40/72 (Schroeder v Federal Republic of Germany, [1973] ECR 125) on the application in 1971 of protective measures with regard to imports of tomato concentrates from Greece, the Court stated at paragraph 14 of the decision (at p. 142) that:
“Since in the present case it is a question of complex economic measures, which for the purpose of their efficacy necessarily require a wide discretion and moreover as regards their effects frequently present an uncertainty factor, the observation suffices that these measures do not appear on issue as obviously inappropriate for the realization of the desired object”.
So far as the onus of proof is concerned, it follows that it is for Wünsche to draw attention to circumstances which would make it possible to conclude that the Commission clearly exceeded its discretion.
Furthermore, it is clear that the application of protective measures cannot, as the Commission alleges, be initiated when only one of the relevant criteria is fulfilled. However, in view of the extent of the Commission's discretion, I do not consider it necessary for each of the four criteria clearly to be complied with.
It is also necessary to take into account the fact that the German market in trade in preserved mushrooms within the Community is virtually identical to the Community market, of which it represents more than 95%. The relevant rules clearly earn the stamp of that state of affairs, and in particular the conflicts of interest between the German traders, who favour imports from the Far East, and French and Dutch producers, who seek to defend their share of the German market.
Finally, in my opinion, it is impossible to make a valid assessment of the validity of Regulation Nos 1412 and 2284/76 and, through it, of the legitimacy of the Commission's attitude, without knowledge of circumstances which led to the adoption of the protective measures in 1974 and which, in the Commission's opinion, justified their maintenance until the beginning of 1977.
Regulation No 2107/74 of August 1974 was adopted in order to combat massive imports at low prices of preserved mushrooms from the Far East which led to a serious crisis in Community production characterized by a collapse in its prices and a massive rise in its stocks. No one denies that the situation on the market in 1974 justified protective measures in order to avoid the disappearance of the Community industry.
In the second half of 1976 those measures were still in force, but with more flexible detailed provisions, since the percentages of the reference quantity laid down in Article 3 of Regulation No 2107/74 rose from 55% in the second quarter (Regulation No 661/76 of 25 March 1976) to 70% in the third and 100% in the fourth quarter.
Lastly, it should be pointed out that in relation to such complex economic measures it is impossible to carry out an exhaustive analysis of the conditions on the market in the framework of judicial proceedings. It will be sufficient to determine whether the error alleged to have been committed by the Commission was of a manifest nature.
(2)
The volume of imports effected or foreseen (Article 1 (a) of Regulation No 1928/75):
(a)
Wünsche asserts that from February 1976 the Commission knew that only very limited imports were possible from the nonmember countries concerned, that is to say the People's Republic of China, Taiwan and South Korea.
In support of that assertion, it has produced telex messages addressed to Mr Windle, the Head of the Fruit and Vegetable Division of the Commission, from Mr Masuhr of the undertaking Faust, with regard to preserved mushrooms from Taiwan, and his colleague, Mr Bodenstab, with regard to preserved mushrooms from China. The German importers therein stated that, according to their information, there were no more stocks available for consignment to the Community from those countries, nor from Korea, in the second half of 1976.
Wünsche also relies on the minutes of meetings of the Consultative Committee on fruit and vegetables — Working Party on processed fruit and vegetables — and of the Management Committee for products processed from fruit and vegetables, at which the representatives of the trade, in the first case, and the Federal Republic of Germany, in the second, made statements to the same effect.
On the other hand, it finds confirmation of the relevance of its information in the figures for imports from the three main supplier countries for the whole of 1976 and also in the fact that a certain number of German importers were unable to use fully the import quotas granted to them for the second half of 1976. On the basis of the statistics of the Federal Statistics Office, Wiesbaden, it also refers to a decrease in imports from 1975 to 1976 of 60% for Taiwan and 40% for South Korea.
(b)
As against those factors, the Commission points out first that imports from nonmember countries into the Federal Republic of Germany can increase considerably in a very short period. That was particularly the case between 1972 and 1973 when they virtually doubled in a year, increasing from 18389 to 37632 tonnes. The pace of that rising trend was still increasing when the Commission introduced protective measures on 30 August 1974. At the time in question, the market had therefore shown its instability.
For the same period, it had at its disposal monthly statistics on imports of preserved mushrooms into Germany from the Far East. Those data did not confirm the description given directly or indirectly by the German traders; they rather indicated a regular supply of the order of 2000 tonnes. With regard to the unused import licences, they represented only 1.3% of the licences issued, that is to say a negligible quantity.
I agree with the Commission that the market in preserved mushrooms was still unstable in the second half of 1976. On the one hand, the stocks imported in the previous years were probably not exhausted, with the result that they continued to supply the market. On the other hand, there were large quantities in the free ports which the importers would certainly have cleared through customs if the protective measures had been suddenly abolished.
Moreover, later events have shown that imports of preserved mushrooms are illsuited to a less restrictive system: in May 1978, another sudden rise in applications for imports necessitated new protective measures.
It seems to me that those various factors prove that the market in preserved mushrooms is a sensitive market. Therefore I do not think that the Commission exceeded its discretion by considering that the volume of imports, effected or foreseen, of preserved mushrooms from nonmember countries into Germany in the second half of 1976 did not make it possible to abolish the protective measures, but only to relax them.
(3)
The situation on the Community market at the time when Regulations Nos 1412/76 and 2284/76 were adopted:
The Community suppliers of preserved mushrooms in Germany are essentially French and Netherlands undertakings. Between 1974 and 1976, the other Community countries had a share of less than 4% in the German imports. That is why discussion may be limited to the situation in France and the Netherlands.
(a)
According to Wünsche, from February 1976 or, at least, from July of that year, the situation was one of real shortage. Even on the assumption that the German market was normally supplied by imports from the Far East — which it denies — the preserved mushrooms available in the Community were insufficient to ensure the regular supply of the German market.
With regard to preserved mushrooms from the Netherlands, it points out first that the stocks available were far too low make a substantial contribution to solving the problems of the German traders, that furthermore those were essentially third-grade bottled conserves the quality of which was far from meeting the requirements of the market. But it attributes the difficulty of satisfying German consumers to the shortage of French products, relying, by way of justification of its assertion, on the appreciable decrease of stocks in France from the beginning to the end of 1976. It contends that French producers did not even reply to offers at very high prices which it had put forward. It adds that the Commission was aware of that situation, in particular as a result of the telex messages which it had sent to that effect.
(b)
The Commission denies that there was a shortage or even real difficulty in obtaining supplies in this connection.
It admits that certain offers, although only a limited number, did not meet with a favourable response on the pan of the French producers. But it believes that, in view of the quantities available that refusal can be explained by the special requirements of the German buyers, relating for example to the time-limits for deliver) or quality requested.
With regard to the stocks, the Commission does not deny that French stocks decreased considerably throughout 1976: from more that 10000 tonnes in January, they fell to 8810 tonnes in July and 4110 tonnes in December. Equally, Netherlands stocks amounted to about 4500, 3000 and 2000 tonnes respectively at the beginning, middle and end of 1976. But the Commission takes the view, with which I concur, that the very existence of stocks at the end of the period in question, makes it impossible to speak of a shortage.
In addition, there can be no doubt that reference should be made to the quantities which were actually imponed into Germany, rather than to stocks. From the monthly tables at the Commission's disposal at the time when the contested regulations were adopted, it is clear that impons from France and the Netherlands did not undergo an appreciable fall from January to July 1976, but remained, so far as French impons were concerned, between 2422 tonnes (in April) and 3499 tonnes (in March) and, so far as imports from the Netherlands were concerned, between 2059 tonnes (in July) and 2998 tonnes (in March).
It may therefore be considered that the Commission did not exceed the limits of its discretion in taking the view, in April and September 1976, that the situation on the Community market did not justify the abolition of the protective measures. Moreover, its analysis was confirmed bv the annual figures for impons of preserves from France and the Netherlands in 1976, which are both higher than the corresponding figures for 1975.
(4)
The prices for Community products on the Community market:
(a)
From the information which it was able to obtain from other imponers, Wünsche considers that the prices of French preserved mushrooms increased by 90 to 100% between July to August 1974 and July to August 1976 and bv about 30% from November to December 1975 and June to July 1976.
That excessive increase seems to it to be incompatible with the objectives which the Community may legitimately pursue. It adds that it is clear from the minutes of the 1976 meetings of the Management Committee for products processed from fruit and vegetables that the Commission was aware of that spectacular increase and that, by maintaining the protective measures, it deliberately followed a policy of protecting Community products and, conversely, of discriminating against importers from nonmember countries.
(b)
The Commission replies that the figures available to it at the time when it adopted the contested measures, which are, unlike those submitted by Wünsche, official figures, do not indicate an increase of that nature. It also states that the price of a tin of 1 kg of French preserved mushrooms rose from DM 2.47 in July 1974 to DM 3.74 in July 1976, that is an increase of 45% and not 100%.
That increase cannot in fact, in my opinion, be described as unreasonable. On the one hand, and as a second consideration, in order to obtain the true level of the increase, the rate of inflation in France from 1974 to 1976 should be deducted from that figure. On the other hand, and primarily, it is necessary to take into consideration the fact that prices in 1974 were particularly low, precisely because of the massive imports at low prices from the Far East. In those circumstances, it seems to me that it cannot be claimed that, in deciding to relax rather than to abolish the protective measures in the second half of 1976, the Commission improperly protected Community products. In view of the level of the prices of Community products, the Commission did not, in my opinion, exceed the limits of its discretion.
(5)
The level and trend of prices obtaining on the Community market for products from nonmember countries:
(a)
According to Wünsche, the price of products from Taiwan increased by 80% between 1974 and July 1976 and bv about 40% from 1975 to 1976. The prices of Korean and Chinese preserved mushrooms, which were originally lower, reached the level of the price of products from Taiwan. From April to December 1976 the increase remained very high, as is shown, for example, by the trend of the selling prices of a Hamburg company, which were DM 1.58 for a half-carton in April and DM 2.19 in December. Even on the basis of the Commission's monthly tables, Wünsche concludes that the prices of products from nonmember countries were higher in 1976 than those of Community products, at least if the customs duties (23%) and importer's profit (8%) are included therein.
(b)
Just as in the case of the price of preserved mushrooms from the Community, the Commission rejects on the basis of the official information at its disposal the figure of an 80% increase in the prices of preserved mushrooms from Taiwan from 1974 to 1976; its sources disclose an increase of only 32%. It regards as decisive the question whether, at the time when the regulations were adopted, the selling prices of preserved mushrooms from nonmember countries were equal to those for preserves from the Community. In order to cam out that comparison, the Commission, in my opinion correctly, includes customs duties but not the importer's profit which the Community. According to the official statistics for April 1976, the last month for which they were known at the time when Regulation No 1412/76 of 18 June 1976 was adopted, the gap between those two prices was still 10% in favour of products from non-member countries. Their competitive advantage had remained substantially the same in July, the last month of reference for Regulation No 2284/76 of 21 September 1976.
I therefore agree with the Commission that the abolition of the protective measures in the second half of 1976 could have led to a massive influx of preserved mushrooms from the Far East and an immediate increase in the difference in prices which at best was narrowing very slowly.
From all the foregoing factors it furthermore does not appear that, by relaxing rather than abolishing in the second half of 1976 the protective measures for imports into the Community of preserved mushrooms, the Commission exercised its discretion in a manner incompatible with the rule of proportionality set out in Article 2 (2) of Regulation No 1928/75 of the Council or with that contained in Article 7 (1) of Regulation No 1927/75. The factors of which it was aware were, in my view, capable of leading it properly to believe that the abolition of these measures might lead to serious disturbances which might endanger the objectives set out in Article 39 of the Treaty.
I therefore conclude that the reply to the Bundesverwaltungsgericht should be that consideration of the question posed has disclosed no factor of such a kind as to affect the validity of Regulation No 2107/74 of the Commission, or of Commission Regulations Nos 1412/76 and 2284/76.
( 1 ) Translated from the French
Full & Egal Universal Law Academy