Opinion of Mr advocate-general Gand

Mr President,

Members of the Court,

In October and November 1967 Markus & Walsh imported into the Federal Republic of Germany sugar confectionary and food preparations containing cocoa (headings 17.04-C and 18.06-B of the Common Customs Tariff) from third countries, in the present case the United Kingdom and the Republic of Ireland. On that occasion the customs office imposed, in addition to the German tax on sugar and the turnover equalization tax, the tax laid down by Regulation No 160/66 of the Council laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products and the costs of production of which are consequently influenced by the price of these products.

By Article 10 of the regulation, the tax which is substituted for the customs duties levied by the importing State is composed of two components:

In certain cases, however, an upper limit for the tax is laid down in Article 16 of Regulation No 160/66 in the following terms:

The proceedings pending between Markus & Walsh and the customs authorities arises from this provision and the Finanzgericht, Hamburg, asks you for your interpretation of it.

In fact although, according to Schedule XL of Annex B to the Protocol to the General Agreement on Tariffs and Trade signed at Geneva on 16 July 1962, the duty for the products in question is 27 %, the customs office, in calculating the maximum rate mentioned in Article 16 of the regulation, has also taken into account an additional duty on the sugar. Undoubtedly, according to footnote (a) relating to tariff headings 17.04 and 18.06 of the Schedule XL of Annex B to the Protocol to GATT, The Community reserves the right to levy, in addition to the bound duty, an additional duty on sugar, corresponding to the charge borne on importation, and applicable to the quantity of various sugars (calculated in sucrose) contained in these products. But Markus & Walsh disputes that this additional duty can be taken into consideration in determining the maximum duty, because Regulation No 160/66 fixes the maximum as the customs duty bound under GATT and does not mention the additional duty on sugar which the Community has reserved the right to levy.

raced with this difficulty, the Finanzgericht asks you to rule whether the concept of a customs duty bound under GATT within the meaning of Article 16 of Regulation No 160/66 must be understood solely to mean the duty of 27 % applicable to the products comprised in tariff headings 17.04-C and 18.06-B or whether that concept also covers the additional duty which, according to footnote (a) to those tariff headings, may be levied on the sugar contained in the products.

II

The case before you therefore displays a special feature since in order to interpret Article 16 of the regulation — which you are certainly empowered to do — you cannot disregard the GATT Protocol, at least to the extent to which Article 16 refers to it. Both before the German court and before you the plaintiff in the main action has asked that the appropriate GATT authorities should be consulted as to the meaning of the words bound customs duty in the practice of that organization. It seems doubtful whether an official reply can be obtained when this point has not given rise to a disagreement or dispute between the Community and another contracting party. In any case, it is not permissible for you yourselves to put the question. Moreover, what you are asked to decide is not the meaning of this term in the doctrine or the practice of GATT, but its meaning in Article 16 of Regulation No 160/66, and your reply will only apply within the limits of that regulation.

Having said that, we are raced with two arguments which have been developed by Markus & Walsh and by the Commission respectively (the Council did not consider that it need submit observations on the meaning which it gives to its own regulation).

1. The first argument certainly keeps closer to the wording of the provisions. It is based on the expressions employed in footnote (a) relating to tariff headings 17.04 and 18.06 of Schedule XL of Annex B to the Protocol. There the Community reserves the right to levy, in addition to the bound duty, an additional duty on sugar calculated in the manner which I have mentioned; therefore, for the annex it is necessarily only the duty of 27 % which represents the bound duty, and the additional duty does not have this characteristic.

2. The Commission's argument is quite different.

3. It is necessary now to choose between these two diametrically opposed interpretations of a provision, which to tell the truth is badly drafted. And it will be observed here that the solution adopted will not be limited to imports from third countries, but will extend mutatis mutandis to intra-Community transactions. In fact, according to the second paragraph of Article 16, the total amount of the charge levied on these transactions may not exceed 9/10ths of the charge levied on imports from third countries. There is therefore a direct connexion between the two systems.

In these circumstances I am of the opinion that the answer to the question asked by the Finanzgericht, Hamburg, should be that customs duty bound under GATT within the meaning of Article 16 of Regulation No 160/66 must be understood to mean, in addition to the duty of 27 % applicable to the products under tariff heading 17.04-C and 18.06-B, the additional duty which by virtue of footnote (a) to those tariff headings, may be imposed on the sugar contained in the product.

1 Translated from the French.