Opinion of the Advocate-General
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My Lords,
As in Case 77/86 R . v HM Customs & Excise ex parte National Dried Fruit Trade Association (" NDFTA" (( 1988 )) ECR 757, these proceedings concern Community legislation imposing a minimum import price ( MIP ) system in respect of dried grapes imported from third countries . The questions referred by the Finanzgericht, Duesseldorf concern what in my opinion in NDFTA I call the "first MIP system ". A description of the first MIP system, is given in the report for the hearing in the present case and in that opinion . Its legislative history can be briefly summarized as follows .
At the relevant time, the basic regulation on the common organization of the market in products processed from fruit and vegetables ( including dried grapes ) was Council Regulation No 516/77 ( Official Journal 1977, L 73, p . 1 ), as amended from time to time, which provided inter alia for common price and levy machinery . Recital 12 recognized that that machinery might prove inadequate in exceptional circumstances .
Article 14 ( 1 ) provided that : "if, by reason of imports or exports, the Community market in one or more of the products specified in Article 1 is or is likely to be exposed to serious disturbances which might endanger the objectives set out in Article 39 of the Treaty, appropriate measures may be applied in trade with non-Member countries until such disturbances or threat thereof have ceased ."
Detailed rules for the application of these provisions are contained in Council Regulation No 521/77 ( Official Journal 1977, L 73, p . 28 ). The Regulation recites that the measures taken pursuant to Article 14 are to cease to apply once the disturbance or threat of disturbance has ceased; they must be suited to the circumstances if they are not to have other than the desired effects . Article 1 provides that, in deciding whether an actual disturbance or a threat of disturbance exists, account is to be taken inter alia of the volume of imports effected or foreseen, the quantities of products available on the Community market, prices and the trends of prices for Community products on the Community market and, under subparagraph ( d ), "where the abovementioned situation arises as a result of imports", account must be taken of "the prices obtaining on the Community market, at a comparable stage for products from third countries, and in particular any excessive downward trend in these prices ."
In the event that serious disturbances exist or are threatened, Article 2 provides that, where required, import certificates may be discontinued or refused, and where not required, imports may be suspended in whole or in part . It also provides for "the introduction of arrangements under which, if the price for an imported product falls below a certain minimum, a condition may be imposed whereby that product may be imported only at a price which is at least equal to such minimum" ( Article 2 ( 1 ) ( c ) ).
By Article 2 ( 2 ), "The measures referred to in paragraph 1 may be taken only to such extent and for such length of time as is strictly necessary . ... They may be restricted to ... particular qualities or types of presentation ... ".
Commission Regulation No 2742/82 ( Official Journal 1982, L 290, p . 28 ) recited that protective measures were needed for dried grapes other than currants because the prices of imports in the marketing year 1981/82 had significantly undercut Community prices leaving, in October 1982, stocks of sultanas equal to 60% of the harvest for that year and exposing the Community market to serious disturbances which might endanger the objectives set out in Article 39 of the Treaty .
A minimum price for imports of dried grapes other than currants was fixed initially at ECU 106.7 per 100 kilograms net . Article 2 ( 2 ) imposed a countervailing charge of ECU 16 per 100 kilograms net if the minimum price was not respected .
The MIP and the countervailing charge, expressed in ECU, had to be converted into national currency for comparison with the contract price on the day of completion of customs import formalities ( Articles 2 and 3 of Regulation No 2742/82 ). Coefficients were set for such conversion and adjusted periodically . At the time relevant to these proceedings, they were contained in Commission Regulation No 2186/83 ( Official Journal 1983, L 210, p . 11 ).
The facts leading to the present reference for a preliminary ruling can be shortly stated . In February and March 1984, the plaintiff in the national proceedings imported three lots of Turkish sultanas, in each case declaring a price which exceeded the MIP . Later enquiries by the customs authorities established that the real contract price was lower than the MIP . Countervailing charges were therefore levied, totalling DM 20 174.70 . The plaintiff now seeks to recover that amount on the basis that the regulations applicable at the time were invalid . The matter has come before the Finanzgericht at Duesseldorf which has referred the following questions :
"1 . Does Article 14 of Regulation ( EEC ) No 516/77, in conjunction with Articles 1 and 2 of Regulation ( EEC ) No 521/77, contain a sufficiently specific enabling provision establishing the essential criteria for protective measures such as those adopted by the Commission in Regulation No 2742/82?
2 . Alternatively : is the term "by reason of imports" in Article 14 of Regulation No 516/77 and Article 1 of Regulation No 521/77 to be interpreted as meaning that imports from non-member countries must have been the main cause of the disturbances at the date on which Regulation No 2186/83 was adopted and at the date on which the plaintiff carried out the imports in question?
3 . Alternatively : must Article 2 ( 2 ) of Regulation No 521/77, in conjunction with Articles 13 and 14 of Regulation No 516/77 and Article 155 of the EEC Treaty, be interpreted as meaning that the Commmission was not entitled to impose a countervailing charge in the event of import prices falling below the minimum import prices laid down?
4 . Alternatively : must Article 2 ( 2 ) of Regulation No 521/77, in conjunction with Articles 13 and 14 of Regulation No 516/77, be interpreted as meaning that the Commission is not entitled to establish a flat rate for countervailing charges so that they exceed the difference between the minimum price laid down and the import price?
5 . Alternatively : is the minimum price laid down in Article 2 ( 2 ) of Regulation No 2742/82 unlawful since it has not been calculated according to objective criteria and no reasons are given for it?"
The third, fourth and fifth questions raise issues which also arose in NDFTA . The submissions made in the present proceedings do not lead me to modify the views I expressed in my opinion in that case, to which I refer .
In its judgment in NDFTA the Court, whilst accepting that a countervailing charge, even if not expressly authorized by Article 2 of Regulation No 521/77 was an appropriate way of enforcing an MIP system, that a fixed rate could be adopted and that sufficient reasons were given for what was done, yet held that "a single, fixed-rate countervailing charge, imposed even where the difference between the import price and the minimum price is very small, amounts to an economic penalty" not shown by the Commission to be necessary for the MIP system to achieve its aim . The Court therefore declared Regulation No 2742/82 ( and, it follows in my view the series of Regulations amending it ) "invalid in so far as it introduced a countervailing charge at a fixed rate equal to the difference between the lowest world market price and the minimum price" ( paragraphs 32 and 33 ).
The first and second questions raise new issues and require more detailed consideration, although the Court' s ruling in NDFTA may afford the plaintiff the necessary relief .
The first question contains the most significant difference between this case and NDFTA : the plaintiff is attacking the Council Regulations underlying the MIP system as well as the implementing Commission Regulations . It contends that very specific enabling provisions are required in this field, in particular since interested parties are not consulted in contrast with anti-dumping proceedings and that the lack of a role for interested parties in the scheme of the Community organization of the processed fruit and vegetables market requires the Court of Justice to compensate by conducting a full examination of the facts relied on by the Community institutions when setting up the MIP system . Failure by the Court to conduct such a review would be contrary to rights guaranteed to the plaintiff by the German constitution .
From those propositions, the plaintiff deduces that Council Regulation No 521/77 is void . Supposedly laying down detailed rules for the implementation of the general provisions of Article 14 of Council Regulation No 516/77, it is in fact scarcely less general than Article 14 and essentially turns over the Council' s entire competence to the Commission . The plaintiff claims that this is excessive delegation contrary to Articles 4, 43, 145 and 155 of the EEC Treaty, the hierarchy of norms and the rule of law .
Article 155 provides that the Commission shall, inter alia, "exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter ".
The Council, which confines its observations in this case to the first question, takes the view that the scope of the discretion conferred upon the Commission by Regulation No 521/77 is within the bounds previously judged acceptable by the Court and is a normal exercise of the power set out in Article 155 of the Treaty . It is sufficiently defined to enable full judicial review to be effected .
Both the Council and the Commission refer to the Court' s ruling in Case 25/70 Einfuhr - und Vorratsstelle v Koester (( 1970 )) ECR 1161 that the Council is not itself required to take all measures relating to the common agricultural policy according to the procedure contained in Article 43 provided that the "basic elements of the matter to be dealt with" have been so adopted, as was done in Regulation No 516/77 . Provisions implementing basic regulations may be otherwise adopted, either by the Council itself or by the Commission pursuant to an authorization complying with Article 155, which is a facultative provision enabling the Council to "determine any detailed rules to which the Commission is subject in exercising the power conferred on it ".
Both institutions also emphasize that the Court has consistently recognized that the Commission must enjoy, and the Council may therefore confer upon it under Article 155, a wide discretion in deciding how to act, sometimes with urgency, in the daily management of agricultural markets ( see e.g . Case 23/75 Rey Soda v Cassa Conguaglio Zucchero (( 1975 )) ECR 1279, at p . 1300 ). They contend that the constraints to be found both in Article 14 of Regulation No 516/77 ( the disturbance must be serious and the measures taken in response must cease as soon as the disturbance does ) and Articles 1 and 2 of Regulation No 521/77 ( laying down the matters to be taken into account when deciding whether serious disturbance exists or is threatened, the type of protective measures which could be taken and the circumstances in which they could be taken ) show that the Commission' s freedom to act was appropriately circumscribed . It was in any case subject to review by the Council on application by any Member State by virtue of Article 14 ( 3 ) of Regulation No 516/77 which gives the Council the power in such circumstances to amend or annul the Commission' s Regulation .
I accept these arguments of the institutions . There is nothing abnormal or excessive in the discretion conferred on the Commission by Regulation No 521/77 . It is necessary that the Commission be able to act quickly and effectively within appropriate and reviewable limits . The Commission' s powers here were clearly defined and exercisable in a manner subject to judicial review ( which is complemented by the power retained by the Council in Article 14 ( 3 ) of Regulation No 516/77 ). I would therefore answer the first question in the affirmative .
On the second question, the plaintiff argues that Article 14 of Regulation No 516/77 and Article 1 of Regulation No 521/77 must be interpreted to mean that imports must be, if not the only, at least the essential cause of the market disturbance . In this case, it argues, the preconditions for applying protective measures were not satisfied : such market disturbance as there may have been was not caused, or not essentially caused, by imports . Two principal arguments are adduced .
First, during the relevant period, the combination of high levels of Community aid and national aid led to artificially raised production and prices, as well as to lower quality since aid was received irrespective of quality . Resort to safeguard measures in those circumstances is unjustified . On this point, the Commission agrees that Greece was granting unauthorized aid, some of which the Commission found to be incompatible with the common market, but alleges that such aid had a partially beneficial, partially neutral effect on the Community market : beneficial in increasing Greek sales within the Community, neutral in increasing Greek exports from the Community . The Commission' s investigation of the alleged aid is continuing . Greece, on the other hand, categorically denied at the hearing that any illegal aid had been granted .
No party was able to present to the Court any figures indicating the amount or purpose of the alleged national aid . The plaintiff' s observations contain some detail of Community aid paid out under the relevant common organization of the market, but I do not understand the plaintiff to be attempting to challenge that system ( except perhaps by reference to GATT, a point I deal with below ). He is referring to unauthorized national aid paid in addition to Community aid . I do not think it right that the existence of national aid prevents the taking of protective measures by the Community of the kind in issue here . Nor is it shown, in my view, in these proceedings that the aid was the cause of the disturbance of the market . That, however, is ultimately a matter to be investigated by the national court .
Secondly, the goods imported were not similar to the Community produce and therefore could not cause disturbance . This raises the question whether a distinction is to be drawn between raisins and sultanas, a matter debated at length in NDFTA .
The plaintiff' s position is that, other than currants, dried grapes divide into two : "rosinen" which are dried grapes with seeds and are no longer sold, at least in Germany, and sultanas which are derived from seedless green grapes . Sultanas further divide into two categories, light and dark . Light sultanas are dipped in water containing small quantities of potassium carbonate and a drying agent before being dried in the sun; dark sultanas are not dipped and are dried in the full sun . Dark sultanas are known as "raisins" in England and the United States . Light sultanas further divide according to whether they are treated with sulphite . The German market requires non-sulphited sultanas on health grounds . All Greek produce is treated with sulphite; it is the only way Greek produce can acquire the colour which the trade associates with sultanas . Therefore Greek produce is not suitable either for the German market or for some other Community markets . The plaintiff was importing non-sulphited sultanas .
This account of the categories of dried grapes is not essentially at variance with that put forward by the NDFTA . In particular, it seems to be agreed that what in Britain are known as raisins are produced from the same grape as Greek sultanas but by different methods . The arguments to the contrary of the Commission and the Greek Government are essentially the same as put forward in NDFTA .
In that case it seemed to me that, whilst my prima facie conclusion would be to accept that there is a distinction between raisins and sultanas, it was really a question of fact for the national court and that for the purposes of the reference, this Court could accept that the distinction existed, since it does not, in my view, follow that it was necessarily ultra vires the Commission to impose an MIP and countervailing charge on all dried grapes other than currants . This is because, as I said in my opinion in NDFTA, "importation of one product not produced in the Community may be capable of threatening a serious disturbance of the Community market in a product produced in the Community ". In particular, Article 14 of Council Regulation No 516/77 does not limit the measures which may be taken to imports of the same product .
In its judgment, the Court, while holding that it was not necessary to decide whether "other dried grapes" might comprise two categories, raisins and sultanas ( paragraph 12 ), held that the NDFTA had not demonstrated that "those two kinds of product cannot satisfy the same needs, so that they cannot be substituted one for the other to any extent" ( paragraph 13 ). The Court thus treated the question as one of evidence - "the Commission"s view that those last two kinds of grapes are to be considered interchangeable must be accepted unless it is demonstrated that those two kinds of product cannot satisfy the same need, so that they cannot be substituted one for the other to any extent ". In that case, the Court expressly considered that the issue was not to be determined "solely on the culinary traditions of certain regions of Great Britain and of Ireland ". It appears, in addition, either to have rejected or to have left aside the detail contained in the Association' s written pleadings as to the respective suitability of raisins and sultanas to commercial food processing applications ( rather than culinary matters ) such as dessication, heating to high temperatures, incorporation in pastes, confectionery and breakfast cereals, and the uncontradicted assertion of the Association that in certain Member States there was no tradition of using raisins .
In the present proceedings, which were pending when NDFTA was heard, the Court has further evidence that, in a third Member State, for some uses at least the two kinds are not regarded as interchangeable . At the hearing in these proceedings the Court was also told that a similar position obtained in the Netherlands and that similar proceedings there had been suspended pending the outcome of these two references to this Court . The problem is, as I see it, not confined to a given region or a single Member State .
However, if the question to be decided is whether there was evidence, on which the Commission could proceed, that the products were interchangeable, I do not consider that it has been shown in this case that a different result should be reached from that reached in NDFTA .
If, however, the matter is one of evidence to be decided in judicial proceedings rather than by the Commission, it still seems to me that the question of interchangeability is one of fact to be decided, on the evidence available to it, by the national court . If the national court finds that the products are interchangeable, it will no doubt follow the decision in NDFTA which proceeds on that basis and finds that the Commission was not incorrect in its view that increasing imports from third countries, particularly Turkey, at a time when world market prices were declining represented a threat of disturbance to the Community market . If there is found by the national court to be a distinction between the Community produce and the goods imported by the plaintiff, that court must decide whether such imports at the relevant time caused, or threatened to cause, a serious disturbance on the Community market for the Community produce .
Both these arguments concern the extent to which the imports actually caused, or threatened to cause, a serious disturbance . The Commission argues that it does not have to be shown that the imports were the primary cause of disturbance . That would be an unworkable test . Interrelated factors create and disturb market conditions : the general economic situation, production costs ( some of which are affected by political considerations, such as the guaranteed incomes fixed within the common organizations of the market ), the weather which determines whether the harvest is good, consumer demand . Certain combinations of such factors will make imports attractive or otherwise . If Community prices are high and there is sufficient demand, lower cost imports will be attracted . If that causes problems for the Community producers, can it be said that their problems are caused, even essentially, by the imports?
The regulations empower the Commission to act when disturbance to the market is caused, or threatened, "by reason of" imports . That must to my mind mean that the imports are a "substantial" or "significant" factor in the cause of disturbance or threat to the market which is capable of correction by the taking of protective measures . If the effective cause of the disturbance ( or threat of it ) lies elsewhere so that protective measures in regard to imports will have no material effect on the disturbance, then the disturbance is not caused or threatened by reason of the imports . On the other hand, I do not consider that the imports have to be the sole cause or even the "primary" cause of the disturbance of the market, or the sole or primary threat to it . That would in many cases rule out the use of protective measures where imports are having or threaten to have a substantial or significant effect on the stability of the market, but where other factors have an influence . In the present case, it seems to me, that there was clearly material on which the Commission could conclude that imports were a substantial or a significant factor if sultanas and raisins are to be regarded as interchangeable . If they are not strictly interchangeable, then it is for the national court to consider whether the import of one had a substantial or significant effect on the market of the other .
The plaintiff has referred to Article 3 of Regulation No 521/77 which provides that "the application of this Regulation shall respect the Community' s obligations under international agreements ". It is contended that the Community must therefore observe GATT and, in particular, Articles XIX, II and XXIII . Reliance is placed on GATT Panel Report L/5778 of 20 February 1985 entitled "The European Economic Community - production aids granted on canned peaches, canned pears, canned fruit cocktail and dried grapes ".
These questions are not raised in the order for reference . The plaintiff does not in any event, in my view, substantiate his arguments, nor do the findings of the GATT Panel seem to me to help him . I do not consider that these questions fall for decision .
Accordingly, the questions put by the Dusseldorf court should, in my view, be answered to the effect that nothing has emerged in the proceedings which leads to Council Regulations Nos 516/77 and 521/77 being declared invalid but that the regulations constituting the first MIP system ( that is, Commission Regulation No 2742/82 and the regulations amending it ) are invalid in so far as they provide for a flat rate countervailing charge, whatever the difference between the actual import price and the MIP . Imports must have been a substantial cause of the alleged disturbance of the Community market for protective measures to be applied .
The plaintiff' s costs are a matter for the referring court . The costs of the Greek Government and of the Council and Commission of the European Communities are not recoverable .
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