Commission of the European Communities v French Republic (68/76)

(2)Justification for the French measure in relation to Articles 38 to 44 of the Treaty

The French Republic adds a number of comments on this subject and, for this purpose, it accepts, purely for the sake of argument, that the Notice to Exporters in question did indeed have an effect equivalent to a quantitative restriction.In that case the legal problem is intricate, since it must be determined precisely what law is applicable to an agricultural product which is not yet covered by a common organization of the market.By proposing the straightforward application of Article 34 to potatoes, the Commission is treating them as an industrial product pure and simple, notwithstanding the provisions of Article 38 (3) of the Treaty.One difficulty remains, since the application of Articles 39 to 46 of the Treaty presupposes in principle that the Council has adopted the necessary measures of secondary legislation. The difficulty provoked by the Council's delay in adopting the measures provided for by the Treaty has been examined by the Court in Cases 2/74 (Reyners), 33/74 (Van Binsbergen) and 48/74 (Charmasson).It emerges from this case-law that the Council 's failure to act does not represent an obstacle to the application of the relevant provisions of the Treaty. This means that not only must the principles concerning the free movement of goods be applied, but also those exceptions to the said principles which are also laid down by the Treaty.The French Republic notes that in connexion with freedom to provide services, the Court has stated that “specific requirements imposed on the person providing the service cannot be considered incompatible with the Treaty where they have as their purpose the application of professional rules justified by the general good”(Van Binsbergen, ground of judgment No 12).Although the judgment in Charmasson merely stated that a product, in that case bananas, which was not covered by a common organization of the market, was subject to the provisions of Article 33, this was not because the Court considered that Title II did not apply to it, but because Article 38 (2) makes reference by implication to the said Article 33.The legal rules applicable to those agricultural products in respect of which the Council has not adopted any particular measure consist of all those relevant provisions of the Treaty, whether statements of principle or exceptions, as they have been interpreted by the Court of Justice.The said relevant provisions of the Treaty provide for two sorts of exception to the principle of the free movement of goods.The first are of the structural kind, that is to say permanent exceptions which are justified by the special nature of the products in question. The French Republic cites:— The system of producers organizations instituted by Regulation No 159/66 on the common organization of the market in fruit and vegetables: although it applies to a stage well in advance of intra-Community trade, this system nevertheless — even if only indirectly or potentially — has effects equivalent to quantitative restrictions;— The system of production and trade quotas for sugar (Regulation No 3330/74) or of catch quotas (judgment of the Court in Joined Cases 3, 4 and 6/76) which also have an undeniably restrictive effect on trade, as the Court also held in Case 190/73 in relation to quota restrictions on the production of hyacinth bulbs.Other exceptions to the principle of the free movement of goods recognized by Community law are measures of a conjunctural nature:— Generally speaking, all intervention arrangements which have the incidental effect of influencing intra-Community trade, if only indirectly;— Specific action intended to counter a temporary imbalance on the market, as, for example, the supplementary aid granted in respect of colza and rape seed processed in Italy (Regulation No 876/67 of the Council of 20 November 1967) in order to lessen disturbances in one Member State resulting from the institution of the common organization of the market in oils and fats, the legality of which was recognized by the Court in Case 153/73.Community law has indeed provided, in the case of agricultural products, for the possibility of giving precedence in the event of economic stress to one or other of the objectives of Article 39 over the objective of the free movement of goods: Case 5/73, Balkan Import-Export v Hauptzollamt Berlin Packhof ([1973] ECR 1091, ground of judgment No 24).In the case of potatoes, the Court could readily concede that the French Government confined itself to giving preference, temporarily, to two of the objectives of Article 39 — ensuring availability of supplies and ensuring that supplies reach consumers at reasonable prices — over the objective of free movement laid down elsewhere.No argument may be adduced from the fact that the measures at issue were adopted by France and not by an institution of the Community. The legal criterion applicable to the restriction cannot be deduced from the national or Community origin of the supposedly restrictive measure. Where secondary Community legislation has already been adopted in relation to a given field the Member States may not intervene. It may be said that the precise purpose of secondary legislation is to explain and define in relation to individual cases the very general exceptions laid down by the Treaty. In consequence, if the Member States themselves were to add to those exceptions it might well be thought that they were going beyond what was reasonably laid down by the Council.The very existence of such secondary legislation also has the effect of bringing about a transfer of powers. If such secondary legislation has established a Community policy the Member States are no longer entitled to adopt concurrent or supplementary measures of intervention: Case 31/74, Galli ([1975] ECR 47).In accordance with the contrary hypothesis, according to which secondary legislation, although envisaged, does not yet exist, the criterion of the national or Community origin of the measure is totally devoid of meaning. Where a certain field is not yet governed by common rules, the Community authorities have no power to take, for example, the necessary measures for conjunctural intervention. No choice of means is possible. Any intervention must of necessity be national.The Commission's argument leads to an absurd conclusion — treating the potato as an agricultural or as an industrial product according to whether the measure of intervention is Community or national.The only valid solution is to accept the legality of national intervention in application of the provisions of Title II.The judgment in Van Binsbergen, which acknowledges that the Member States are entitled to restrict freedom of movement for persons in the case of a “special condition”, clearly demonstrates that the Court itself intended to rule to that effect: the present case forms part of a body of case-law which is already well-defined.From the point of view of expediency, since the problem concerns those few agricultural products which are not yet covered by a common organization of the market, the practical scope of such a solution is very restricted. It does not therefore represent any real danger to the common market.On the other hand, from the legal point of view, it involves restrictions on free movement laid down by the Member States in respect of particular cases corresponding to those laid down by the Council in a general way: both remain subject to review by the Court of Justice, whose task it is, as a final court of appeal, to declare whether they are compatible with Title II of Part Two of the Treaty.In the Commission's view it is inherent in the Community legal order that a Member State may not rely upon the absence of Community measures or a failure by the institutions to exercise their powers in order to justify the adoption of internal rules which are contrary to the rules contained in the Treaty.In particular, a failure to act on the part of the Community institutions cannot be relied upon in support of the introduction and retention of the measure adopted by the French Government since Community provisions were indeed adopted in order to counteract the shortage of potatoes found to exist within the Community and the supply difficulties resulting therefrom.Following the end of the transitional period, if it appears that special rules for agricultural products are appropriate, they may be adopted only within the framework of the common agricultural policy which was to have been established by the end of the said period at the latest.But the special rules for agriculture cannot, in principle, affect the rules of the Treaty concerning free movement of goods. Those rules are binding upon the Community legislature itself in relation to the setting-up of the common agricultural policy. They are binding a fortiori in relation to national measures which the Member States may be prompted to adopt with regard to agricultural products.Apart from the case of quite exceptional circumstances, such as the repercussions of monetary upheavals, the agricultural provisions of the Treaty do not allow the Community institutions the possibility of drawing up measures which do not conform to those rules.The free movement of goods is the basis and the very essence of the single market, which the common agricultural policy is intended to achieve in relation to agricultural products. Intervention arrangements are amongst those measures listed expressly in Article 40 (3) of the Treaty which may be adopted in the framework of common organizations of the market in pursuit of the objectives set out in Article 39. Such measures, which are adopted for the purpose of organizing production and regulating the markets in order to attain the said objectives, can in no way be said adversely to affect the unity of the Community market since, as is expressly laid down in the second subparagraph of Article 40 (3) of the Treaty, they must adhere to the requirement of nondiscrimination as embodied in the principle of free movement within the sphere of the common agricultural policy.None of the measures of intervention adopted by the Community may be said adversely to affect the free movement of goods within the Community or to constitute a measure having an effect equivalent to a quantitative restriction.Account should be taken of the stage in the economic cycle at which the Community provisions take effect. Those measures apply at a stage considerably in advance of Community trade. They concern the production stage of the goods concerned, not that of marketing.Although Community agricultural measures may indirectly influence trade they cannot affect the freedom of that trade within the Community: they do not disturb the unity of the common market, nor do they constitute barriers to intra-Community trade.Such measures therefore have nothing in common with those whose purpose is to isolate a national market within the common market, which may be said to be the case of the application of a national system involving import or export licences in trade between Member States.The rules relating to the free movement of goods are automatically and wholly applicable to the actions of the Member States in the sphere of agricultural products both in the case of products which are already covered by a common organization of the market and in the case of those which are not yet so covered. Regarding customs duties and charges having equivalent effect between Member States, Articles 39 to 46 do not derogate in any way from Article 16 of the Treaty and the prohibition on customs duties on exports and charges having equivalent effect has therefore applied to all products with direct effect as from 1 January 1962: Case 63/74, Cadsky v Istituto Nazionale per il Commercio Estero ([1975] ECR 281).The same is true of the provisions prohibiting measures having an effect equivalent to quantitative restrictions: Joined Cases 3, 4 and 6/76, Kramer ([1976] ECR 1279).The Commission also cites Case 91/75, Hauptzollamt Landau v Miritz, concerning Article 37 (4).The Commission emphasizes the essential difference between national measures and those which the Community is prompted to take in the context of the common agricultural policy. This difference arises not so much from the origin of the measures: it arises from their nature, in view of the objectives to which they may tend and the extent of their field of application. On the supposition that action must be taken to face the risks of disturbance on the market in a product, such as those arising from a shortage or from supply difficulties; it is one thing to take Community measures which are applicable in all the Member States and are intended to tackle the situation as a whole, taking account of the Community markets in the product in question; it is quite another thing to accept that a Member State may adopt national measures which, since they may apply ex hypothesi only within the territory of that State, can only solve the difficulties within the context of that national market alone.The general rules contained in the Treaty on the free movement of goods apply in their entirety with respect to agricultural products, even in the case of products, such as potatoes, which are not yet covered by a common organization of the market: judgment in Case 48/74 Charmasson v Ministre de l'Économie et des Finances.What the Court said in relation to Article 33 in that case also applies to Article 34.Even in the absence of a common organization of the market in potatoes the Treaty makes available to Member States the means of alleviating existing difficulties: in the present state of Community law on foreign trade, potatoes are amongst those products in respect of which the Member States have retained, pursuant to Article 10 of Regulation (EEC) No 2603/69 (OJ L 324, English Special Edition 1969 (II), p. 590), the power to adopt independently measures restricting exports to third countries. It may be that the application of such national measures of commercial policy could be obstructed by deflexions of trade. There is nothing to prevent the Member States' having recourse to the provisions of Article 115 of the EEC Treaty where the conditions for the application of that article are fulfilled.