Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland (231/78)

I —Facts and procedure

Part Four of the Act of Accession, entitled ‘Transitional measures’, contains, in Title I, entitled ‘Free movement of goods’, Article 42 which provides:‘Quantitative restrictions on imports and exports shall, from the date of accession, be abolished between the Community as orginally constituted and the new Member States and between the new Member States themselves.Measures having equivalent effect to such restrictions shall be abolished by 1 January 1975 at the latest’.Title II of Part Four, entitled ‘Agriculture’, contains four chapters. Article 60, which occurs in Chapter 1 (‘General provisions’), is worded as follows:(1) In respect of products covered, on the date of accession, by a common organization of the market, the system applicable in the Community as originally constituted in respect of customs duties and charges having equivalent effect and quantitative restrictions and measures having equivalent effect shall, subject to Articles 55 and 59, apply in the new Member States from 1 February 1973.(2) In respect of products not covered, on the date of accession, by a common organization of the market, the provisions of Title I concerning the progressive abolition of charges having equivalent effect to customs duties and of quantitative restrictions and measures having equivalent effect shall not apply to those charges, restrictions and measures if they form part of a national market organization on the date of accession.This provision shall apply only to the extent necessary to ensure the maintenance of the national organization and until the common organization of the market for these products is implemented.’

II —Conclusions of the parties

The Commission claims that the Court should:(1) Declare that failing to repeal or amend the disputed provisions with regard to restrictions on the importation of main crop potatoes, the Government of the United Kingdom of Great Britain and Northern Ireland has failed to fulfil an obligation under the EEC Treaty;(2) Order the Government of the United Kingdom of Great Britain and Northern Ireland to pay the costs of the proceedings.The Government of the United Kingdom contends that the Court should:(1) Rule that the control of imports is necessary to ensure the maintenance of the national organization of the market in potatoes in the United Kingdom, that the United Kingdom is entitled to continue such control which forms an integral part of that organization until the common organization of the market in potatoes is implemented, and that the United Kingdom has not, by exercising such control, failed to fulfil an obligation under the EEC Treaty;(2) Order the Commission to pay the costs.The French Government contends that the Court should:— Dismiss the application made by the Commission.

III —Submissions and arguments of the parties

First of all the Commission summarizes the organization of the market in potatoes in the United Kingdom:— Each year the Ministry of Agriculture calculates the probable consumption and yield of potatoes in the United Kingdom, based on recent trends, and fixes a target acreage which is intended to provide enough potatoes for home demand with a slight surplus.— Producers who grow more than one acre of potatoes for sale must be registered with the Potato Marketing Board (hereinafter referred to as ‘the Board’).— The Board, which is a statutory body established under the Potato Marketing Scheme (Approval) Order 1955, notifies each registered producer how many acres he should plant (the ‘quota’) in order that the target acreage may be achieved.— Each registered producer must pay to the Board a contribution on each acre planted. Producers who wish to plant more than their quota are required to pay an additional contribution.— In order to provide a minimum guaranteed price for the producer, the Board may, with the approval of the Ministry of Agriculture, institute a buying-in programme for maincrop potatoes conforming to standards under which any registered producer may offer his potatoes for sale to the Board at a price designed to cover his costs of production and storage. This price is increased as the season advances. Potatoes bought by the Board are sold as stock feed, the price difference being largely made up by the government.— If at the end of the crop season the average potato market price is shown to have fallen below this guaranteed price despite buying-in by the Board, the government makes a deficiency payment which is paid to the Board to be used for recouping the costs of the present or future buying-in programmes.— The Board regulates the sales of potatoes for human consumption by prescribing the minimum size and quality of potatoes which may be sold by producers and by requiring sales normally to be made only to licensed merchants.— Imports and exports of main-crop potatoes are controlled by the Department of Trade under powers derived from the Import of Goods (Control) Order 1954. In order to keep the United Kingdom market in balance, exports are banned in times of shortage and imports are banned in times of surplus.— Since the accession of the United Kingdom on 1 January 1973, it seems that there have been export bans on main-crop potatoes in 1973 (30 March to 31 May), 1974 (20 February to 31 May) and 1975 (16 October to 7 August 1977). At all other times, save from September to October 1975, the ‘normal ban’ on imports applied.Within the Community there are considerable differences between the prices quoted on the markets of the different Member States. The Commission attaches as an annex to its application a paper giving the wholesale prices of main-crop potatoes during the crop seasons 1973/1974 to 1976/1977 and also for the crop season 1977/1978.The figures show that the continuance of the ban on imports of main-crop potatoes into the United Kingdom after the end of 1977 helped to maintain prices on the London market at the beginning of 1978 whilst it depressed prices on the Rotterdam and particularly the Arras markets.In summarizing the case-law of the Court in the matter the Commission states that the Charmasson judgment is confirmed by the judgments given in Case 68/76 Commission v French Republic [1977] ECR 515 and in Joined Cases 80 and 81/77 Commissionnaires Réunis and Les Fils de Henri Ramei v Receveur des Douanes [1978] ECR 927.Article 60 (2) of the Act of Accession must be read in the context of the whole act and in particular of Articles 2 and 9. Article 2 enunciates the principle, which is fundamental to the Act of Accesion, of acceptance of the ‘acquis communautaire’. An exception is made to this principle by a system of transitional measures (Article 9).The Commission does not accept that the phrase ‘until the common organization of the market… is implemented’ (Article 60 (2)) is a ‘special provision’ to which the time-limit provided by Article 9 is subject. The drafting of Article 60 (2) does not permit such an interpretation since the placing of the phrase indicates that it is intended to be a limitation to an exception to the general rule, as is the other part of the sentence.On the other hand the provisions of the Act of Accession which might be interpreted as being ‘special provisions’ in the sense of Article 9, entailing an extension of transitional measures beyond 31 December 1977 are quite explicit in this regard.In fact Article 60 (2) of the Act of Accession must be placed in its proper context. At the time of its drafting the prevailing interpretation of the Treaty was to the effect that, in the absence of a common organization of the market in a product, the original Member States still possessed the power to retain certain barriers to free movement of goods within the Community, a power which was an integral part of a national organization. The system in the Act of Accession was therefore assimilated to that thought to pertain under the Treaty, on the understanding that if at 31 December 1977 there were still no common organization, the position regarding trade restrictions in the new Member States would be exactly the same as in the original Member States. In this sense Article 60 (2) was not to be regarded as a ‘transitional measure’ at all, any more than was Article 60 (1).In its judgment in the Charmasson case the Court declared that as regards the original Member States the derogations which a national organization of the market could effect from the general rules of the Treaty were only permissible during the ‘transitional period’. In the light of that judgment Article 60 (2) has taken on the character of a transitional measure permitting, for trade involving the new Member States, a system different from that applicable to trade involving merely the original Member States.A contrary interpretation of Article 60 (2) would mean an extension beyond the time-limit fixed by Article 9 of two different sets of rules. This would manifestly be contrary to the intent of that article as it was originally envisaged.Finally the Commission recalls that the Council is at present considering proposals regarding other common organizations of the market for products in which trade involving the new Member States is an important factor in the Community market. A decision by the Court to the effect that restrictions on trade with the new Member States in these products are still permissible might have the effect of postponing yet further a decision by the Council to establish common organizations.The Government of the United Kingdom contends, as regards the facts, that the restrictions on the importation of potatoes form part of the national organization of the United Kingdom potato market and that they are necessary to ensure the maintenance of that organization.The Government of the United Kingdom contends, as regards the law, that it is authorized to make use of the derogation provided for agricultural products in Article 60 (2) of the Act of Accession.The question how long the derogation is to last must be answered by reference to Article 9 (2) of the Act of Accession. The ‘special provision’ of Article 60 (2) is that the derogation is to last ‘until the common organization of the market for these products is implemented’.In order to give the article the meaning which the applicant desires to attribute to it it would be necessary to add at the end the words ‘or at the end of 1977 whichever is the earlier’. No rule of interpretation can properly allow such words to be added.In referring to the reasons for the derogation the British Government states that when the new Member States acceded it was necessary for them to change from the national market organization for each product to the common organization of the market where there was one. Where was no common organization of the market, in the view of the British Government it would have been inconceivable for the new Member States to agree to abandon their own market organizations with nothing to put in their place. Accordingly Article 60 (2) of the Act of Accession enabled the new Member States to retain in respect of products which at the moment of accession were subject to a national organization of the market quantitative restrictions and measures having equivalent effect until the common organization of the market for those products was implemented.Under the EEC Treaty there should have been by the end of the transitional period in 1969 a common organization of the market for every agricultural product. The Act of Accession did not alter the obligations of the original Member States to establish a common organization of the market for agricultural products or extend the transitional period applicable.It is against this background that the Charmasson case must be interpreted.In the present case on the other hand the new Member States joined a Community in which the original Member States were already in default as regards their obligations to establish the common agricultural policy within the period fixed by Article 40 (1) of the EEC Treaty. The situation which arose was accordingly expressly provided for in the Act of Accession.In replying to some of the arguments put forward by the Commission the Government of the United Kingdom observes first of all that the ‘acquis communautaire’ is, under Article 2 of the Act of Accession expressly subject to the conditions laid down in that Act.It emphasizes that Article 60 of the Act of Accession must be considered as a whole and that the phrase ‘until the common organization of the market is implemented’ constitutes a ‘special provision’ within the meaning of Article 9 (2). In this connexion it refers to the wording of the German version of Article 60.The Government of the United Kingdom considers that in the opinion of the Commission the prevailing interpretation of the EEC Treaty at the time when the Act of Accession was drafted was the exact opposite to what the Court of Justice later held in the above-mentioned Charmasson case (48/74).The authors of the Act of Accession intended that the new Member States were to be given the same rights after 1977 as it was thought the original Member States would have, namely the right inherent in a national organization to retain quantitative restrictions for products for which there was no common organization.The difference between the original Member States and the new Member States on the entry into force of the Treaty of Accession was this:The original Member States, according to the Commission, felt on a mistaken interpretation of the EEC Treaty, that they had this right. The new Member States acquired the right not on an erroneous interpretation of the EEC Treaty but on the clear wording of the Act of Accession.If, as the Commission maintains, the wording of Article 60 (2) when it came into force gave new Member States the right which the United Kingdom now claims, its meaning cannot possibly have been changed ex post facto by the decision of the Court of Justice in the Charmasson case.The French Government observes that the Act of Accession, unlike the provisions of the Treaty of Rome, did not prescribe a ‘transitional period’. Consequently the case-law of the Court of Justice as established in the Charmasson case cannot be applied to the very different situation which arises from the Act of Accession.Article 60 (2) of the Act of Accession constitutes an instance of an application of the notion of ‘special provision’ covered by the reservation in Article 9.In view of the fundamental structural differences between British agriculture and that in the original Member States the latter recognized in the negotiations leading up to accession that it was impossible to apply in their entirety the rules on freedom of trade to agricultural systems presenting such fundamental differences. It was accordingly logical that they should prescribe a specific transitional arrangement whereby the national organizations of the market could continue in being until the Community replaced them with common organizations. This was not to renounce the transitional nature of these provisions but to accept that it was necessary to provide special solutions for exceptional situations.In reply to the observations of the French Government, the Commission emphasizes that it expressly stated that the Act of Accession provides not for a single transitional period but rather for a ‘system of transitional measures intended to facilitate the adjustment of the new Member States to the rules in force within the Communities’. The Commission referred to Case 48/74, Charmasson, in its examination of the effects of the Act of Accession only in support of its argument to the effect that, at the time when it was drafted, Article 60 (2) was not to be regarded as a transitional measure at all, any more than was Article 60 (1).The Commission maintains that Article .60 (2) does not constitute a ‘special provision’. The special provisions which entail an extension beyond 31 December 1977 are quite explicit in this regard. The absence of a time-limit in the second subparagraph of Article 60 (2) is explained by the fact that the draftsmen in no way considered that paragraph as a transitional measure and even less as a transitional measure capable of extending any derogation from the rules of the Treaty beyond 31 December 1977. The phrase ‘until the common organization of the market … is implemented’ is inserted ex abundanti cautela so that there can be no question of continuing the special system of trade after the entry into force of the common organization of the market.Finally, the Commission claims that the Court should dismiss the French Governement's conclusions and, at all events, order the French Government to bear its own costs incurred as a result of its intervention.

IV —Oral procedure

The parties submitted oral argument at the hearing on 20 February 1979.The Advocate General delivered his opinion at the hearing on 6 March 1979.

Costs