Contents
In Case 157/78REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Düsseldorf for a preliminary ruling in the proceedings pending before that court betweenTRAWIGO GMBH & Co. KG, Würselen,andHAUPTZOLLAMT [Principal Customs Office] Aachen-Nord,THE COURT,composed of: J. Mertens de Wilmars, President of the First Chamber, acting as President, Lord Mackenzie Stuart (President of the Second Chamber), P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,Advocate General: H. MayrasRegistrar: A. Van Houttegives the following
Judgment
Facts and Issues
The facts of the case, the course of the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I —Facts and written procedure
A —The framework of the regulations
Article 1 (1) of Regulation No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (Official Journal, English Special Edition 1971 (I), p. 257) authorizes the Member States to charge and grant monetary compensatory amounts on imports and exports of the products described in Article 1 (2):‘. .. products covered by intervention arrangements under the common organization of agricultural markets;.. . products whose price depends on the price of the products referred to [above] and which are governed by the common organization of market or are the subject of a specific arrangement under Article 235 of the Treaty.’Article 1 (3) of the regulation as amended by Regulation No 2746/72 of the Council of 19 December 1972 (Official Journal, English Special Edition 1972 (28 -30 December), p. 64) provides that paragraph 1‘… shall apply only where application of the monetary measures referred to … would lead to disturbances in trade in agricultural products.’noteArticle 4 of Regulation No 974/71 provides that:‘No compensatory amount shall be fixed where, in any Member State, the percentage referred to in Article 2 (1) does not exceed 2.5 %’ (this percentage represents the difference between the official conversion rate of the currency concerned and the so-called green rate).By Regulation No 800/77, a number of goods were brought within the system of monetary compensatory amounts. They were different kinds of sugar confectionery, ice-cream and other ices, chocolate and cocoa-based products, pastry, biscuits, cakes and other fine bakers' wares and various food preparations.The second and third recitals in the preamble to that regulation read as follows:‘… the monetary compensatory amounts do not apply to all products not covered by Annex II to the Treaty obtained from agricultural products and governed by special rules adopted under Article 235; … on the other hand, all the relevant basic agricultural products are subject to the said amounts;. . . such a situation may lead to distortion of competition, having regard to the high level of the monetary compensatory amounts currently applicable; … in the case of the processed products not subject to monetary compensatory amounts, the difference in prices of the basic products has become so marked as to have a considerable effect on the conditions of competition of the processed products, having regard to the characteristics of the market in certain sensitive products.’The sixth recital provides that the list of non-Annex II products should be reviewed by the end of the year in the light of their economic situation. Thus the second subparagraph of Article 2 (2) of the regulation provides that monetary compensatory amounts shall not apply beyond 31 December 1977 in respect of products falling within tariff subheadings 17.04 D (sugar confectionery not containing cocoa, other than liquorice extract, chewing gum and white chocolate), 18.06 B (ice-cream (not including ice cream powder) and other ices containing cocoa), 18.06 C (Chocolate and sugar confectionery containing cocoa), 19.08 B (pastry, biscuits, cakes and other fine bakers' wares other than gingerbread and the like) and 21.07 C (ice-cream (not including ice-cream powder) and other ices not containing cocoa).By Commission Regulation No 2657/77 of 30 November 1977 on the application of monetary compensatory amounts to certain products not covered by Annex II to the Treaty (Official Journal 1977, L 308, p. 48) the time-limit on the applicability of Regulation No 800/77 was abolished and the monetary compensatory amounts on the products under consideration were maintained for an indefinite period.The adoption of Regulation No 800/77 had been preceded by the Commission Decision of 23 March 1977 authorizing Ireland to take protective measures in respect of certain processed agricultural products under Article 135 of the Act of Accession (Official Journal 1977, L 97, p. 29). That decision authorized Ireland until 31 December 1977 to levy a charge on imports from the United Kingdom and grant a payment on exports to the United Kingdom of processed agricultural products covered by tariff headings 17.04 D, 18.06 B, 18.06 C, 19.08 B and 21.07 C. The recitals in the preamble to that decision state that:‘… the compensatory amounts charged or granted … [on] basic products would amount to 34.7 % in the case of the United Kingdom and to 10.4 % in the case of Ireland; … this situation, entailing a relative disadvantage to the manufacturers … in Ireland on the cost of the cost of the basic products of 24.3 % may lead to distortion in the terms of competition in trade in the processed agricultural products referred to in the Irish application between the Member States concerned; … this situation, in its present acute form since November 1976, has given rise to serious difficulties for the sectors concerned in Ireland …’The monetary compensatory amounts thus introduced by this bilateral system between the United Kingdom and Ireland were replaced by fresh amounts annexed to the Commission Decision of 4 May 1977 amending that of 23 March 1977 (Official Journal 1977, L 123, p. 18). Under Article 3 thereof, this second decision as well as the decision of 23 March 1977 ceased to apply on the day on which Regulation No 800/77 took effect (that is 23 May 1977).
B —The facts
By a cumulative customs declaration of 1 August 1977, Trawigo GmbH & Co. KG applied for clearance into free circulation of compressed tablets and jelly confectionery from Belgium and gums from Italy coming under heading 17.04 D of the Common Customs Tariff. The goods had been purchased at a price of DM 11351 in all.By an assessment of 10 August 1977, the Hauptzollamt [Principal Customs Office] Aachen-Nord charged a monetary compensatory amount of DM 66.50. Trawigo lodged an objection against this assessment, but the Hauptzollamt dismissed it as unfounded.
C —The question referred for a preliminary ruling
An action was brought before the Finanzgericht Düsseldorf, which by an order of 7 July 1978 decided to stay the proceedings and refer the following question to the Court for a preliminary ruling under Article 177 of the EEC Treaty:‘Is Commission Regulation (EEC) No 800/77 of 20 April 1977 invalid in so far as it provides that monetary compensatory amounts are to be charged on imports and granted on exports of goods coming within tariff heading 17.04 D (Code No 1704806 and 1704602)?’The order of the Finanzgericht was received at the Court on 26 July 1978.Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.
II —Summary of the written observations submitted to the Court under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A —Observations submitted by Trawigo GmbH & Co. KG
Trawigo submits that the introduction, by Regulation No 800/77, of a monetary compensatory amount in respect of the processed products in question is contrary to the authorization given in Regulation No 974/71, as well as to Article 235 of the Treaty, the principle of proportionality and the prohibition on discrimination.
1.Breach of the authorizing rule
In Case 151/57 Peiser (sub judice), it has already been pointed out that the only possible legal basis for the introduction of a monetary compensatory amount in respect of non-Annex II products was Article 235 of the Treaty, and that Article 14 (3) and (4) of Regulation No 1059/69 of the Council of 28 May 1969 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products (Official Journal, English Special Edition 1969 (I), p. 240) did not constitute an effective ‘specific arrangement’ capable of being based on Article 235.In its application in Case 11/78, the Italian Government stated in order to support a submission of absence of authorization that there was no reason to fear disturbances in trade in agricultural products. It took the view that confectionery is not an agricultural product but a (non-agricultural) processed product. In its submission, the disturbance had to have taken place in trade in agricultural products and not in trade in confectionery. The Commission found no such disturbance in trade in agricultural products, but only distortions of competition for the products in respect of which monetary compensation was introduced.Regulation No 800/77 is not based on a sufficient statement of reasons, and infringes Article 190 of the Treaty. It is not conclusively shown that there was a threat of disturbances in trade in agricultural products within the meaning of Article 1 (2) of Regulation No 974/71, which is a condition of the application of the rules.
2.Breach of the principle of proportionality
In Case 151/77, the Commission placed the accent on the incidence of the monetary compensation measures on the processed products, stating that in the case of the products coming under tariff headings 18.06 C and 19.08 B, the average incidence amounted to 6.28 % and 6.45 % at the beginning of 1977. It should be noted that referring to a purely mathematical incidence does not fulfil the condition laid down in the basic regulation, according to which the monetary compensation measures are not to be applied to processed products unless, in addition to the incidence, disturbances in trade have become apparent. Moreover, the Commission does not explain how it reached these figures. Since they do not greatly exceed the 5 % limit fixed by the Commission itself, the monetary compensation should be abolished as soon as the incidence falls below that limit.Trawigo submits in an annex to its observations an economic report on the monetary compensation measures applicable to confectionery and sweets, which refutes the Commission's statistics. The correct data in no way allow it to be inferred that there was a threat of disturbances in trade. Moreover, there is no kind of correlation between monetary stability and the decrease in exports.The Commission must prove that the price of confectionery is a function of the price of the intervention products concerned, that is to say cereals, sugar and milk powder. Thus far it has not done so. In any case there is no such dependence of the price of confectionery upon the price of the basic products aforementioned. The trends of the prices of the intervention products subject to monetary compensatory amounts have had no influence upon the trends of the prices of the processed products. Other factors have however been decisive, above all in the case of chocolate-based products the price of raw cocoa, which has greatly increased in recent years, and the considerable processing costs.On the other hand, the insignificance of the effect on the processed product — confectionery — of the monetary compensation applicable to an intervention product is illustrated by the fact that the monetary compensatory amount on gums, jelly confectionery and compressed tablets represents approximately 0.6 % of the final price of the product. Such minimal charges are not apt to create disturbances in trade. Neither do such compensatory amounts lend themselves to correcting disturbances.Finally, application of the monetary compensation system to confectionery in trade between all the Member States of the Community was also unnecessary because there were disturbances only between the United Kingdom and Ireland. Consequently extension of the system to all the Member States infringes the prohibition on excessive measures. Free movement between Member States — which is the primary objective of the Common Market — would have been disturbed less by ‘prolonged’ bilateral monetary compensation than by the introduction of multilateral monetary compensatory amounts applicable also to States in which trade in the processed products at issue was not threatened with disturbances.It may also be wondered whether the Commission's practice of charging monetary compensatory amounts on processed products when the maximum average incidence in a Member State exceeds 5 % is compatible with the principle of proportionality. In effect that rule means that monetary compensatory amounts may be levied in all the Member States, even when the incidence of the monetary compensatory amounts on the basic products only exceeds the 5 % limit in a single Member State. The principle of proportionality required monetary compensatory amounts not to be introduced at least in dealings between States belonging to the monetary snake, and required them to be confined to countries in respect of which the incidence exceeded the 5 % limit.
3.Breach of the prohibition on discrimination laid down in Article 40 (3) of the Treaty
The breach is double:— On the one hand, compensatory amounts were applied to certain processed products but not to others, but no criterion or reason appears to have governed the choice. Thus the difference between the treatment of jam and marmalade and that of confectionery is all the more surprising as Ireland had also asked to be authorized to include those products in the protective measures. The Commission refused this request ‘in view of the small economic incidence which this difference represents in relation to the average value of the finished products.’— On the other hand, specific forms of discrimination are observed in the sector under consideration. Thus, as regards white chocolate, the Commission states that no request for the introduction of monetary compensatory amounts and no complaint were ever submitted. However, it has not stated that requests for the introduction of compensatory amounts or complaints had been submitted in respect of other products belonging to the group of products in question. If requests or complaints were the justification for applying monetary compensatory amounts to a specific product, no monetary compensatory amount could therefore be introduced in respect of confectionery.
B —Observations submitted by the Irish Government
The Irish Government refers to the observations which it submitted in Case 151/77 cited above.
C —Observations submitted by the Italian Government
The Italian Government refers to the observations which it submitted in Case 151/77 and to the arguments put forward in the action which it brought against the Commission in Case 11/78, in so far as Regulation No 800/77 makes provision, through Regulation No 2657/77, for the continued application, even after 31 December 1977, of the compensatory amounts to products coming under tariff headings 17.04 D, 18.06 B, 18.06 C, 19.08 B, and 21.07 C.
D —Observations submitted by the Commission
The Commission refers to the observations which it submitted in Case 151/77.Trawigo, represented by J. Gündisch, Advocate of the Hamburg Bar, the Irish Government, represented by J. Murray, Barrister-at-Law, the Italian Government, represented by I. M. Braguglia, Avvocato dello Stato, and the Commission of the European Communities, represented by its Legal Adviser, P. Gilsdorf, acting as Agent, submitted oral argument at the hearing on 12 December 1978.The Advocate General delivered his opinion at the hearing on 1 February 1979.In a letter of 27 March 1979 to the President of the Court, Counsel for the plaintiff submitted observations concerning the Advocate General's opinion and asked the Court to consider re-opening the oral procedure.Having found in the Judges' Council Chamber on 3 April 1979 that it was already in possession of all the factors necessary for the purpose of dealing with the problems arising in this case, the Court decided not to re-open the oral procedure.
Decision
Costs
Operative part
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.