Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof (5/73)

First Question

(a) According to the Commission, Article 103 of the Treaty must be considered as the correct legal basis for Regulation No 974/71 since the latter effectively constitutes a measure of conjunctural policy.Monetary measures so far as they are short term, constitute typical conjunctural measures whose specific objective was constituted by short term aims, not exceeding periods of 18 months, and consisting essentially of methods of correcting or damping cyclic movements.As to the objection raised on the grounds that Regulation No 974/71 was pursuing aims of agricultural policy having only fortuitous conjunctural effects, this lost sight of the fact that the Regulation at issue concerns the agricultural aspect of an aggregate of measures of a monetary character enacted by the Member States in agreement with the Community Institutions.Not only does Article 103 itself declare that Member States shall regard their conjunctural policies as a matter of common concern but further the whole Community is in effect interested to see that measures are taken to prevent the markets in the currencies of Germany and the Netherlands being swamped with offers of dollars. As a common floating of Community currencies was not yet possible in May 1971, the floating of the florin and the DM required accompanying measures even if they hindered free movement of goods.A ban on the lifting of the fixed parities between Member States was not to be found either in Article 107 of the Treaty or the Bretton Woods Agreement binding the Member States by the expedient of Article 234 or in the use of fixed parities after the setting up of the agricultural markets.The Resolution of 22 March 1971 concerning the realization by stages of economic and monetary union within the Community (OJ C 28, 27. 3. 1971, p. 1) expressed only a political commitment and the measures relating to exchange rates remained within the powers of the Member States; it followed that the decision to let a currency float could not be considered incompatible with the obligation to cooperate referred to in Article 5 of the Treaty.The absence of compensatory amounts had upset the internal agricultural market both by the influx of imports at reduced prices and the inadequacy of refunds on exports.On the question whether the introduction of compensatory amounts should have been based first on Article 43 of the Treaty, Article 103 being only subsidiary, the Commission considers that the terms of Article 103 show that powers are concurrent.If the plaintiff's view were followed, the powers would be shared between various Community bodies and conjunctural measures would be fragmented contrary to what was implied in Article 103, since that provides for more flexible procedures than those needing Parliamentary consultation, precisely because measures of a conjunctural character are necessarily urgent.If the Council, on the proposal of the Commission, gave preference to Article 103, this was because of a desire to avoid incorporating the system of compensatory amounts in agricultural policy, to emphasize its exceptional and short-term nature and avoid Community financing because it was preferable to let the Member States concerned bear the financial consequences.By 1973 the conjunctural aspect had fallen into the background. For this reason Articles 28, 43 and 235 were invoked alongside Article 103 in Regulation No 2746/72 (OJ L 291, 28. 12. 1972, p. 148).To the extent that Article 103 confers powers which are in addition to the powers in individual sectors, the Council cannot be reproached for not having had recourse of Article 19 (2) of Regulation of the Council No 804/68 establishing a common organization of the markets in the milk and milk products sector (OJ L 148, 28. 6. 1968, p. 13), which definitely allows derogation from the prohibition on imposition of customs duties and charges having equivalent effect.As to the effect of compensatory amounts in relation to the principle of the free movement of goods, the Commission after observing that Article 103 cannot be used for the insertion of safeguard clauses observes that the free movement of goods within the framework of the organizations of the agricultural markets was not of the same irreversible nature as in the industrial sector and that corrective measures appeared to be necessary. In any event the system of compensatory amounts was less restrictive than possible quantitative restrictions.As to the form of Regulation No 974/71, the Commission observes that, if having regard to the flexible voting procedure on the methods of implementation provided for in Article 103 (3), it was understandable that the Council should in accordance with this provision use the most flexible measure, viz. the directive, that did not in any event preclude the Council from delegating to the Commission its powers for the implementation of the rules that it lays down under Article 155 of the Treaty. To the extent that the basic decision lies in the Council's setting up a system of financial charges which of necessity implies a large number of implementation measures and which interposes itself into an already existing mechanism of a Community policy, the implementation measures had of necessity to come from the executive body. Moreover, the form of regulation had to be most clearly shown in so technical a field both from the point of view of implementation and the unity of Community law and also the legal protection of the individual. So the Commission did not see how the Council could not itself exercise a power which it could delegate to the Commission.(b) As regards the use of the dollar as a standard of comparison under Article 2 (1) of Regulation No 974/71, the Commission observes that only an all-in system of compensatory amounts was attainable in practice and in any event it was not possible to limit the collection of compensatory amounts to cases where the imported product enjoyed an advantage due to currency fluctuations because that would have implied supervision for every single import transaction and this would have gone against the principles governing the collection of levies and payment of refunds; the Court of Justice itself had recognized the validity of abstract methods of calculation for this purpose (Judgment of 15. 12. 1970, Case 31/70, Deutsche Getreide und Futtermittel, Rec. 1970).The use of the dollar parity as a standard of comparison took account of the realities of international trade, while an all-in calculation, based on the mean of the parities of the currencies of third countries, needing such diverse factors to be taken into consideration as the size, value, origin and contractual methods whereby agricultural products were transferred, would not properly have reflected the fluctuations in the exchange rate of the American dollar which was the basis of most international trade.In fact the plaintiff in the main action could have safeguarded itself against the consequences of using American currency as the criterion by using the American dollar as the currency for payment or providing for the vendor's taking over liability for the compensatory amount.There was no infringement of the principle of proportionality, the necessary respect for which, as recorded in the last recital of Regulation No 974/71 must be assessed on the basis of the ‘strictly necessary nature’ of the system in its entirety and not of individual imports. Whilst admitting that the Council could have used the mean of the parities of currencies of third countries as a criterion it must also be admitted that the choice taken remained within the limits of the discretion available to the legislator. The implementation of the Regulation at issue would always have allowed the Commission to adapt the compensatory amounts to changes in circumstances.No discrimination was to be found in the system of compensatory amounts since, on the one hand, the imposition was based on objective criteria and on the other hand, as regards the different burden on each product, not based on monetary measures, account had to be taken of the matters raised concerning infringement of proportionality. As to the alleged advantage of agricultural producers in acquiring raw materials, the Commission observes that for agricultural products (e. g. seeds) the compensatory amounts reduced this advantage and that for imported industrial products the effect of revaluation had been only a moderate price reduction.The infringement of Article 39, resulting from a very high price to the consumer (Article 39 (1) (e)) could not be established since the compensatory amounts had not been fixed too high and Article 39 authorized the legislator, within the limits of its discretion, to secure a balance between the aims there set out.As to Article 110, this was too wide and indefinite for individual rights to be derived from it. Moreover the system used had minimized harm to international trade having regard to the prevailing conditions.