Commission of the European Communities v French Republic (232/78)

III —Submissions and arguments of the parties

The Commission in its application describes the system set up by the French Republic to restrict the importation of mutton and lamb in the following words:1. Imports of frozen mutton and lamb are in principle prohibited subject to certain exceptions.2. The system applied to imports of live animals and also to fresh and refrigerated mutton and lamb is based on a “threshold” price protected by a system of bans on imports and of “surcharges” (“reversements”). It is implemented by the grant or refusal of domestic import licences. Although no maximum limit is imposed the Board issue importers only with “allocation certificates” (“certificats d'imputation”) drawn on an “Inclusive import licence” (“licence globale d'importation”) which are allotted to them and limited as to quantity and the duration of their validity. The Board issues such import permits only when a certain reference price quotation in France reaches or exceeds the threshold price. If the national reference price quotation stays below that price for one week the issue of import licences is suspended and is resumed if the threshold price is reached during the following week. Imports are banned if the threshold price is not reached for two consecutive weeks, the frontier being opened only if that price has been exceeded for two weeks in succession.3. In addition the Board imposes a “surcharge” (“reversement”) on imports of live animals for slaughter and of fresh or refrigerated mutton and lamb carcases the amount of which varies according to the domestic quoted reference price of sheep on the French market. The surcharge is fixed at six different flat rates according to the weekly level of the quoted price.4. The level of the threshold price as well as the amounts of the surcharges are periodically adjusted to the trend of rearers' production costs. The increase in the level of the surcharges paid by importers has been greater than that of the threshold prices, because it has taken into account part of the fall in the value of the currencies of the countries exporting sheep in relation to the French franc so as to lessen the effects of the absence of any specific system of monetary compensation in the French organization of the market.’The Commission points out that the application by a Member State in intra-Community trade:— Of charges having an effect equivalent to customs duties such as the French ‘surcharges’ on imports of mutton and lamb;— Of quantitative restrictions on imports such as closing the French frontier to Community mutton and lamb; and— Of measures having equivalent effect to quantitative restrictions such as the national system of import licences,is incompatible with the provisions of the EEC Treaty on the free movement of goods, namely with Articles 12 and 30 thereof.After the transitional period provided for by the EEC Treaty the application of national measures derogating from the rules on the free movement of goods can no longer be justified — in trade with any Member State — either by the absence of any common organization of the market (cf. Case 68/76, Commission of the European Communities v French Republic [1977] 1 ECR 515) or by their incorporation in a national market organization in the products in question (cf. Case 48/74, Charmasson v Minister for Economic Affairs and Finance (Paris) [1974] 2 ECR 1383).According to the Commission, restrictions on imports of mutton and lamb from the United Kingdom could no longer be justified under Article 60 (2) of the Act of Accession after the end of 1977.The Government of the French Republic submits in its defence that in relation to the United Kingdom the provisions of the Treaty of Rome must be construed in the light of the special wording of the Act of Accession.Contrary to what the Treaty of Rome has provided the Act of Accession has not laid down any principle that there is a ‘transitional period’. The Act of Accession contains ‘derogations’ or ‘transitional measures’, which were to terminate at the end of 1977, subject to ‘the dates, time-limits and special provisions’ provided for in that Act (Article 9 (2)), but no transitional period. Consequently the case-law of the Court of Justice as laid down in the Charmasson case cannot be applied to the very different situation resulting from the Act of Accession.Article 60 (2) of the Act of Accession is an example of the application of the concept of the ‘special provision’ to which Article 9 is subject. Having regard to the fundamentally different patterns of British agriculture and of farming in the old Member States the latter recognized at the time of the accession negotiations that it was impossible to apply the rules laid down by the Treaty of Rome relating to freedom of movement in their entirety to such fundamentally dissimilar economies. In conformity with the logic of the situation they therefore adopted a specific transitional formula which enabled the national organizations of the market to continue until the Community should have replaced them with a common organization. This was not a waiver of the transitional nature of those provisions but an acknowledgement that it was necessary to find .;pecific solutions to exceptional situations.The fact that that is the proper interpretation to be given to Article 60 (2) of the Act of Accession is confirmed by a comparison between that provision and Article 45 of the Treaty of Rome, which is the corresponding provision. Unlike Article 45 of the Treaty of Rome, Article 60 (2) of the Act of Accession does not provide for any transitional arrangements and does not refer to any concept of time-limits. Article 60 (2), in the literal sense of its wording, provides that there may be derogations from the provisions of Title I and that the national organization may be maintained ‘until the common organization of the market for these products is implemented’. A comparison between Article 60 (2), which is a ‘special provision’, and the other special provisions provided for by the Act of Accession, especially Articles 54 and 64 and Protocol No 18 on the import of New Zealand butter and cheese, confirm that what has just been said is well founded. This comparison in fact makes it clear that if the special provision is intended to continue without being subject to any condition other than the one which it stipulates itself, there is no mention of the period within which it is to be implemented. A contrario, if, notwithstanding the special provision, the end of 1977 has been adopted as the irrevocable time-limit, such a provision has been formally written in following the special provision.The Government of the French Republic in an annex to its defence briefly describes the main features of the French market in mutton and lamb which justify maintaining in force the measures challenged by the Commission. They are as follows:(2) The home production of mutton and lamb is not sufficient to meet home demand;(b) The regions where sheep are reared in France are mountains and foothills which are less-favoured areas;(c) The price level in France, compared with that of other producing countries, is accounted for by high production costs and a difference of approach in the arrangements for guaranteeing farmers'earnings;(d) The stable production of homereared mutton and lamb in France presents a contrast to the wide seasonal variations found on the markets of the other producers.The system set up by the French authorities, which is operated by reckoning from the threshold price, makes it possible to avoid serious disturbances of the market by sudden seasonal fluctuations adversely affecting producers' earnings and stable consumer prices. In all respects this system is comparable to the mechanisms provided for by the rules in respect of agricultural products of which there is a shortage in the EEC.Taking into account the mechanisms of the organization of the market in mutton and lamb in France the existing provisions relating to imports form the principal part without which that organization would cease to serve any useful purpose for maintaining the standard of living of producers who for the most part are located in less-favoured areas. The abrupt disappearance of this organization of the market without any safeguards would inflict on them irreversible damage and many farmers would be forced out of business.The Commission in its reply decided not to submit a detailed analysis of the French Government's arguments in its defence and referred to the observations which it submitted in Case 118/78, C.J. Meijer B.V. v The Department of Trade in Case 231/78, Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland, in which the Republic of France intervened ([1979] ECR). The question whether under Article 9 of the Act of Accession the applicability of Article 60 (2) of that Act is limited temporally to 31 December 1977 or whether on the other hand the provision allows Member States to maintain, without any fixed temporal limitation, obstacles to the free movement of certain agricultural products, which is the central issue in this case, is posed in exactly the same terms as in the two cases mentioned above.The Government of the French Republic decided not to deliver a rejoinder.