Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. This case concerns a request from the German Finanzgericht Muenchen for a preliminary ruling with regard to the scope of Articles 366 and 368 of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (1) (hereinafter "the Act of Accession") in conjunction with Article 1 of Regulation (EEC) No 449/86, (2) and Article 1 of Protocol 3 to the Cooperation Agreement signed at Belgrade on 2 April 1980 between the European Economic Community and the Socialist Federal Republic of Yugoslavia (hereinafter "the Agreement"), which was approved for the Community by Regulation (EEC) No 314/83. (3)
The questions referred to the Court arose in the course of a dispute between Gebrueder Weis GmbH (the plaintiff in the main proceedings, hereinafter "Weis") and the Hauptzollamt Wuerzburg (the defendant in the main proceedings, hereinafter "the Hauptzollamt").
Background
2. In the framework of an authorization granted to it for outward processing, Weis during 1986 and 1987 sent fabrics from Portugal via the German Zollamt Aschaffenburg (hereinafter "the Zollamt") to the former Yugoslavia, where they were processed into men' s outer garments and were then returned to the Community via the same Zollamt.
Upon outward customs clearance in Germany of the unprocessed Portuguese goods, movement certificates filled in by Weis were produced to the Zollamt on each occasion for endorsement. Upon inward customs clearance in Germany of the goods processed in Yugoslavia, movement certificates made out by the Yugoslav authorities were acknowledged on each occasion by the Zollamt as proof of origin and no customs duties were levied.
Following a check carried out by the Oberfinanzdirektion Nuernberg, the Hauptzollamt nevertheless decided by a corrective decision to proceed to collect customs duties. Weis contested that decision before the Finanzgericht Muenchen, which referred two questions to the Court for a preliminary ruling. For a further statement of the facts and for a reproduction in full of the questions, I refer to the report for the hearing.
The first question referred to the Court
3. The Finanzgericht refers to Articles 366 and 368 of the Act of Accession and to Article 1 of Regulation (EEC) No 449/86 and asks whether in 1986 goods obtained from Portugal in trade between Germany and Yugoslavia were to be regarded as goods originating in the Community within the meaning of Article 1 of Protocol 3 to the Agreement. The Finanzgericht also wishes to know to what extent the answer to that question depends on whether or not the goods in question were in free circulation within the Community "as previously constituted". (4)
4. According to Article 15 of the Agreement no customs duties are, in principle, levied on "products originating in Yugoslavia" which are imported into the Community. (5) It may be seen from the last sentence of Article 1(1) of Protocol 3 to the Agreement (referred to in Article 30 of the Agreement) that "materials originating in the Community" (6) are regarded as "products originating in Yugoslavia" on condition that they have undergone working or processing in Yugoslavia which is more than "insufficient". (7)
5. It is common ground that the Portuguese products in question underwent more than "insufficient" processing in Yugoslavia. However, the question is whether these products could be regarded as "products originating in the Community". The Hauptzollamt, supported by the Commission in its written observations submitted to the Court, thinks that they could not. It is true that Portugal has been since 1 January 1986 a member of the Community (8) but, during a transitional period expiring on 31 December 1987, Portuguese products were still subject to certain customs duties within the Community. According to the Hauptzollamt and the Commission, (9) Portuguese products could not yet be regarded during that transitional period as "products originating within the Community" and thus assimilated to Yugoslav products within the meaning of Article 1(1) of Protocol 3 to the Agreement, so that Article 15 of the Agreement was not applicable.
6. It cannot be denied that since 1 January 1986 Portugal has been a full member of the Community and that since then Portuguese products must in principle be regarded as products originating in the Community. The fact that in 1986 Portuguese products were still subject to certain customs duties within the Community does not suffice to draw the conclusion that these were not "products originating in the Community" within the meaning of Article 1 of Protocol 3 to the Agreement. That obligation to pay customs duties between the acceding and the other Member States is a domestic matter which cannot be raised against third countries. As far as a third country such as Yugoslavia was concerned, Portugal had been a full member of the Community since 1 January 1986 and its products must therefore be regarded as "products originating in the Community". (10)
7. Against that point of view the Commission contends that at the time of the accession of Portugal to the Community on 1 January 1986 the territorial sphere of application of the Agreement was not automatically extended to Portugal. That argument ° which was considerably toned down by the Commission in its answer to an incidental question raised by the Court ° seems to me to conflict with Article 61 of the Agreement in conjunction with Article 54(2).
According to Article 61 the Agreement "shall apply ... to the territories in which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty ...". When the Community is enlarged, so that the EEC Treaty applies also the territory of the new Member States under the conditions laid down in the Act of Accession, the result is that the Agreement itself also applies in these new States. That is expressly recognized in Articles 366(1) and 368 of the Act of Accession, which provide that Portugal was to apply the Agreement as from 1 January 1986, although subject to the rules defined in Article 367 of the Act for cases in which, "for reasons outside the control" of the Community or the Portuguese Republic, no agreement could be reached with a third country with regard to transitional rules.
The principle contained in Article 61 of the Agreement is confirmed by Article 54(2) thereof, which provides:
"In the event of a third State acceding to the Community, appropriate consultations shall be held within the Cooperation Council so that the interests of the Contracting Parties as defined by this Agreement may be taken into consideration." (11)
It seems to me that that provision of the Agreement is clearly based on the principle that Portugal, upon accession, is a full member of the Community: Article 54(2) would not have needed to provide for a procedure for consultation if, as the Commission claims, the accession of a third State to the Community in no way affects the territorial scope of the Agreement.
8. The objection might be raised that the granting to Portuguese products of the quality of "products originating in the Community" in trade with Yugoslavia would automatically increase, for products from former third countries, in this case Portugal, free access to Yugoslavia. However, that is incorrect since Yugoslavia, according to Article 29(2) of the Agreement, is not obliged to grant free access to products from the Community but on the other hand may, under the said Article 54(2) of the Agreement, hold consultations with the Community. It would also have been possible, if desired, to agree on transitional rules pursuant to Article 367 of the Act.
On the contrary the position is that, according to the point of view expressed above, products from Portugal which, as in this case, are sufficiently processed in Yugoslavia may be re-imported into the Community duty-free under Article 15 of the Agreement. That seems, however, to comply with the objective of the Agreement which, according to Articles 1 and 2, is in the first place to contribute to Yugoslavia' s economic and social development. "In the field of trade, the object of this agreement is to promote trade between the Contracting Parties ... with a view to improving the conditions of access for Yugoslav products to the Community market." (12) The abovementioned point of view is entirely in line with that. In fact, if Portuguese products too, after processing in Yugoslavia, qualify for exemption from customs duties on (re)importation into the Community, that is advantageous to the economy of Yugoslavia, where the working or processing of those products creates extra employment and income.
9. I therefore come to the conclusion, on the basis of both the wording and the aims of the Agreement, (13) that in 1986 Portuguese products were to be regarded as "products originating in the Community" within the meaning of Article 1 of Protocol 3 to the Agreement. In that connection no importance should be attached to the question whether or not the products, after transport from Portugal to Germany, were in free circulation within the original Community, in view of the fact that other factors already described determine the quality of "products originating in the Community". (14)
The second question referred to the Court
10. With its second question the Finanzgericht enquires whether a trader such as Weis ought to have been able to detect the error allegedly committed by the German customs authorities in exempting Weis' s products from customs duties. In dealing with the first question referred to the Court I have already stated that in my opinion the exemptions in this case could not be regarded as an error (section 6 et seq. above). However, in case the Court should decide otherwise, I nevertheless wish to consider the Finanzgericht' s second question.
11. As the Commission rightly states, this question must be answered in the light of Article 5(2) of Council Regulation No 1697/79 of 24 July 1979. (15) Article 5(2) lays down three cumulative conditions under which the competent customs authorities may waive the post-clearance recovery of customs-duties which have not been demanded: (16) the original failure to collect the duty must have been the result of an error made by the competent authorities, the person liable must have acted in good faith ° or in other words could not himself have detected the authorities' error ° and he must have observed all the provisions laid down by the rules in force as far as his customs declaration is concerned. The Court has consistently held that that means that the person liable is entitled to the waiver of the recovery if these conditions are met. (17)
12. The Finanzgericht is asking the Court to interpret the second condition. With regard to that condition the Court decided in the Foto-Frost judgment that a person liable must be regarded as having acted in good faith where "specialist judges" ° that case also concerned a German Finanzgericht ° "expressed the view that it was very doubtful whether duty was payable on operations of the type at issue". (18) According to the Court that applies a fortiori "since previous operations had been granted exemption from duty". (19)
It may be seen from the statement of the reasons on which this question was based that the Finanzgericht Muenchen also entertained serious doubts as to whether Weis was liable for the import duties in this case. Moreover it appears from the Finanzgericht' s statement of the facts that the German customs authorities repeatedly exempted transactions by Weis from customs duties before proceeding to recovery. It therefore appears to me that Weis acted in good faith within the meaning of Article 5(2) of Regulation No 1697/79.
13. That is in no way affected by the Binder judgment in which the Court stated that an attentive trader was not acting in good faith if he could have detected an error made by the customs authorities from a reading of the Official Journal of the European Communities. (20) From my consideration of the first question referred to the Court it may be seen with sufficient clarity that from a reading of the Official Journal alone Weis could not have deduced whether or not it was possible to rely on Article 15 of the Agreement.
14. Like the Commission and the Finanzgericht I conclude therefore that a trader who has acted as Weis did has acted in good faith within the meaning of Article 5(2) of Council Regulation No 1697/79 of 24 July 1979.
Conclusion
15. I propose that the Court should reply as follows to the questions referred to it for a preliminary ruling:
(1) Articles 366 to 368 of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties and Article 1 of Regulation (EEC) No 449/86 of 24 February 1986 should be interpreted as meaning that products originating in Portugal which in 1986 were exported via the Federal Republic of Germany to Yugoslavia for the purpose of processing should be considered, in trade between the Federal Republic of Germany and Yugoslavia, as products originating in the Community within the meaning of Article 1 of Protocol 3 to the agreement signed on 2 April 1980 between the Community and the Socialist Federal Republic of Yugoslavia. The question as to whether or not, when they were sent from Portugal to the Federal Republic of Germany, the products were in free circulation in the Community is not relevant in this case.
(2) In circumstances such as those in this case, if it appeared that such products were classified by mistake as products originating within the Community, it must be presumed that a trader could not have detected such an error, with the result that he acted in good faith within the meaning of Article 5(2) of Council Regulation (EEC) No 1697/79 of 24 July 1979.
(*) Original language: Dutch.
(1) ° OJ 1985 L 302, p. 23, at pages 132 and 133.
(2) ° Regulation (EEC) No 449/86 of 24 February 1986 determining the arrangements to be applied by the Kingdom of Spain and the Portuguese Republic to trade with certain third countries (OJ 1986 L 50, p. 40).
(3) ° Council Regulation No 314/83 of 24 January 1983 on the conclusion of the Co-operation Agreement between the European Economic Community and the Socialist Federal Republic of Yugoslavia, OJ 1983 L 41, p. 1.
(4) ° This obviously means the Community before the accession of Spain and Portugal.
(5) ° The report for the hearing makes a detailed reference to Article 15.
(6) ° The concept of products originating in the Community is defined in Article 1(2) of the said Protocol 3.
(7) ° Article 3(3) of Protocol 3 specifies the types of working or processing which must be regarded as insufficient .
(8) ° See Article 2(2) of the Treaty concerning the accession of the Kingdom of Spain and the Portuguese Republic to the European Economic Community and to the European Atomic Energy Community, OJ 1985 L 302, p. 9.
(9) ° Here they rely on Article 211(1) of the Act of Accession.
(10) ° Moreover between the Member States too the exceptions laid down in the Act of Accession to the principle of a full Portuguese membership have in the past been strictly interpreted by the Court. See my Opinion with regard to the judgment in Case C-113/89 Rush Portuguesa [1990] ECR I-1425 at section 12.
(11) ° See the Declaration on the interpretation of the term Contracting Parties as used in the Agreement , OJ 1983 L 41, p. 101.
(12) ° Article 14 of the Agreement.
(13) ° It is beyond dispute that international agreements such as the Agreement must be interpreted on the basis of their wording and in the light of their objectives. See Opinion 1/91 [1991] ECR I-6079 at paragraph 14.
(14) ° It cannot be deduced with any certainty from the file whether the Portuguese goods, as a result of inward clearance in Germany by payment of the relevant duties, were also put into free circulation in the Community.
(15) ° Council Regulation (EEC) No 1697/79 of 24 July 1979 on the post-clearance recovery of import duties or export duties which have not been required of the person liable for payment on goods entered for a customs procedure involving the obligation to pay such duties, OJ 1979 L 197, p. 1.
(16) ° Case 314/85 Foto-Frost v Hauptzollamt Luebeck-Ost [1987] ECR 4199 at paragraphs 22 to 26.
(17) ° Foto-Frost, paragraph 22, most recently confirmed by the judgment in Case C-348/89 Mecanarte [1991] ECR I-3299 at paragraphs 12, 13 and 14.
(18) ° Foto-Frost, paragraph 25.
(19) ° Foto-Frost, paragraph 25.
(20) ° Case 161/88 Binder v Hauptzollamt Bad Reichenhall [1989] ECR 2415 at paragraphs 20 and 23.
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