JUDGMENT OF 24. 10. 1973 — CASE 10/73 REWE-ZENTRAL v HAUPTZOLLAMT KEHL
In Case 10/73 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht of Baden-Württemberg for a preliminary ruling in the action pending before that court between
THE COURT composed of: R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh and A. J. Mackenzie Stuart, Judges, Advocate-General: K. Roemer Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — Facts and procedure
II — Observations submitted under Article 20 of the Statute of the Court
A — Observations of the plaintiff in the main action
On the first question
On the second question
On the third question
B — Observations of the German Government
On the first question
On the second question
On the third question
C — Observations of the Council
D — Observations of the Commission
On the first question
On the second question
On the third question
Grounds of judgment
Analysis of the compensatory amounts system
I — Question one
(a) The legal basis of Regulation No 974/71
(b) The form in which the disputed measure was adopted
(c) Whether the application of compensatory amounts within the Community is compatible with Articles 8, 9, 12 and 13 of the Treaty
II — Question two
III — Question three
Costs
I —. Facts and procedure
1. Is Regulation (EEC) No 974/77 of the Council of 12 May valid in so far as it provides for levying compensatory amounts within the Community (Article 1)?
2. If question No 1 is answered in the affirmative:
3. In the event of an affirmative reply to the first question and a negative reply to the second:
II —. Observations submitted under Article 20 of the Statute of the Court
A —. Observations of the plaintiff in the main action
B —. Observations of the German Government
C —. Observations of the Council
D —. Observations of the Commission
1. the questions put by that Court do not reveal anything calculated to affect the validity of Regulation No 974/71;
2. that the conditions imposed by Article 8 of this provision for the ending of the system which it sets up had not been met by 16 May 1972; and
3. that neither Articles 5 and 107 of the Treaty nor the Resolution of the Council of 22 March 1971, prohibited the Member States at the time in question from freeing the rates of exchange of their currencies.
1. By order dated 8 November 1972, lodged at the Registry on 19 February 1973, the Baden-Württemberg Finanzgericht referred to the Court for a preliminary ruling the question of the interpretation and validity of various provisions contained in Regulation No 974/71 of the Council of 12 May 1971, concerning 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 (OJ L 106 of 12 May 1971, p. 1), and on the interpretation of Articles 5 and 107 of the EEC Treaty and the Resolution adopted by the Council and government representatives of the Member States of 22 March 1971 on the establishment in stages of an economic and monetary union within the Community (OJ C 28 of 27 March 1971, p. 1).
2. On 16 May 1972 the plaintiff in the main action imported 19200 kg of peach preserves from France into the Federal Republic of Germany, and was charged, under Regulation No 974/71, compensatory amounts at the rate of 0.32 DM per 100 kg, a sum calculated, for products from France under tariff heading 20.06, by reference to the Annexes to Regulation No 979/72 of 12 May 1972 (OJ L 113 of 15. 5.1972, p. 2) in conjunction with Regulation No 980/72 of the Commission (OJ L 113 of 15. 5.1972, p. 64).
3. As a result of the increasing influx of foreign currency and short-term speculative capital in the early months of 1971 and the effects produced by this in some Member States, especially the Federal Republic of Germany and the Netherlands, the Council indicated in a Resolution of 9 May 1971 (OJ C 58 of 10. 6. 1971, p. 1) that it was prepared to envisage that, in certain cases, these countries might, for a limited period, widen the margins of fluctuation for the exchange rates of their currencies in relation to their (present) parities.
4. The organization of agricultural markets is designed, inter alia, to ensure a fair standard of living for the agricultural community and to stabilize markets, in particular by means of a stable price system whereby target prices, threshold prices and intervention prices are determined on the basis of fixed parities for the currencies of the various Member States by reference to a single unit of account.
5. As a result, the Council decided that the measures to be taken immediately should consist in the introduction of a system of compensatory amounts which these Member States would be authorized to charge on imports and grant on exports in their trade both with other Member States and with third countries, with a view to offsetting the effects of the monetary measures on the price of basic products for which intervention prices have been imposed, and for agricultural products whose price depends on the price of those products.
6. Under Article 2 of Regulation No 974/71, the compensatory amounts are obtained by applying to the prices of agricultural products covered by intervention arrangements the percentage difference between the official parity and the true parity of the national currency in relation to the US dollar.
7. Owing to the deterioration of the monetary situation, particularly the suspension of the convertibility of the dollar on 15 August 1971 and the subsequent floating of Belgo-Luxembourg Economic Union currencies from 23 August 1971, the system of compensatory amounts was extended to a wider range of products and to the exports and imports of those Member States.
8. Subsequently to the facts giving rise to the action the Council, by Regulation No 2746/72 of December 1972, made the compensatory amounts scheme compulsory and incorporated it into the framework of the common agricultural policy, giving Articles 28, 43 and 235 of the Treaty as its basis.
9. The circumstances outlined above and their continuing development must be borne in mind in considering the intervention made by the Council and the Commission.
I —. Question one
10. The first question asks whether Regulation No 974/71 is valid insofar as it authorizes the charging of compensatory amounts in trade between Member States.
(a). The legal basis of Regulation No 974/71
11. This question concerns, first, whether the validity of the above Regulation could be affected by the fact that it is based on Article 103 of the Treaty, which does not touch on the common agricultural policy, the latter being governed by the specific provisions of Articles 38 to 47 of the Treaty, and that in any case, the said Article 103 authorizes only the adoption of conjunctural measures, which the disputed measures are not.
12. Article 40 of the Treaty states that Member States shall bring the common agricultural policy into force by the end of the transitional period at the latest and that, in order to attain the objectives set out in Article 39 a common organization of agricultural markets is to be established.
13. On the other hand, Article 103 refers to Member States' conjunctural policies, which they must regard as a matter of common concern.
14. The floating of the exchange rates for the German and Dutch currencies, deemed essential if the wave of speculative capital into the Federal Republic and the Netherlands was to be checked, imperilled the unity of the common market and made measures designed to safeguard the machinery and objectives of the common agricultural policy imperative.
15. However, owing to the time needed to give effect to the procedures laid down in Articles 40 and 43, a certain amount of trade might then have passed free of the regulations, and this could jeopardise the relevant common organizations of the market.
(b). The form in which the disputed measure was adopted
16. The next question is whether Regulation No 974/71 is invalid on the ground that Article 103 of the Treaty, notably in paragraph 3, authorizes the adoption of measures only in the form of a directive or decision, not in the form of a regulation.
17. Although by Article 103 (1) Member States are bound to regard their conjunctural policies as a matter of common concern, the wording does not preclude Community institutions from having power to lay down themselves, without prejudice to other procedures set out in the Treaty, conjunctural measures on matters within the spheres of their competence.
18. The phrase measures appropriate to the situation in Article 103 (2) means that, as regards form, too, the Council may choose whichever seems best suited to the case in hand.
(c). Whether the application of compensatory amounts within the Community is compatible with Articles 8, 9, 12 and 13 of the Treaty
19. Next, it is asked whether the disputed Regulation can be reconciled with the prohibition, at the end of the transitional period, against all customs duties or charges having equivalent effect on imports and exports in trade between Member States, under Articles 8, 9, 12 and 13 of the Treaty.
20. Although the compensatory amounts do constitute a partitioning of the market, here they have a corrective influence on the variations in fluctuating exchange rates which, in a system of market organization for agricultural products based on uniform prices, might cause disturbances in trade in these products.
21. Thus the Council, by adopting them, did not contravene the provisions referred to by the national court.
II —. Question two
22. The second question asks whether the authorization to charge compensatory amounts was no longer valid on 16 May 1972 — the date of the importation in question — by virtue of Article 8 (2) of Regulation No 974/71.
23. Article 8 of Regulation No 974/71 provides that it shall cease to be applicable as soon as all the Member States concerned again apply the international rules on margins of exchange rate fluctuation around official parity.
24. The agreement of 18 December 1971 did not meet these requirements.
III —. Question three
25. The third question asks whether Articles 5 and 107 of the Treaty, and the Resolution adopted by the Council and government representatives of the Member States of 22 March 1971 on the establishment by stages of an economic and monetary union should be interpreted as prohibiting Member States, at the time of the importation in dispute, from freeing their rates of exchange, that is, from floating their currencies.
26. One of the cardinal aims of the Treaty is to create a single economic region, free from internal restrictions, in which economic and customs union may be progressively achieved.
27. Moreover, the Council Resolution of 22 March 1971, which is primarily an expression of the policy favoured by the Council and government representatives of the Member States concerning the establishment of an economic and monetary union within the next ten years following 1 January 1971, cannot for its part, either, by reason of its content, create legal consequences of which parties might avail themselves in court.
28. The costs incurred by the Government of the Federal Republic of Germany, the Council and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable, and as these proceedings are, insofar as the parties to the main action are concerned, in the nature of a step in the action pending before a national court, the decision on costs is a matter for that court.
On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Government of the Federal Republic of Germany, the Council and the Commission; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 3, 5, 8, 9, 12, 13, 38 to 47, 103, 107 and 177; Having regard to Regulations of the Council Nos 974/71 of 12 May 1971 and 2746/72 of 19 December 1972; Having regard to Regulations of the Commission Nos 1013/71 and 1014/71 of 18 May 1971, 979 and 980/72 of 12 May 1972; Having regard to the Council Resolution of 9 May 1971; Having regard the Resolution adopted by the Council and government representatives of the Member States of 22 March 1971; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; /Haying regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT in answer to the questions referred to it by the Finanzgericht of Baden-Württemberg by an order of that court dated 8 November 1972, hereby rules:
1 Examination of the questions referred has not revealed any elements capable of affecting the validity of Regulation No 974/71 of the Council nor that of Regulations Nos 979/72 and 980/72 of the Commission fixing the compensatory amounts applicable during the period indicated in the questions referred.
2 Neither Articles 5 and 107 of the Treaty, nor the Resolution adopted by the Council and government representatives of the Member States of 22 March 1971 on the establishment in stages of an economic and monetary union, can be interpreted as in themselves imposing on Member States a prohibition against altering the parity of the rates of exchange for their currency otherwise than by establishing a new fixed parity, which might be invoked by interested parties in the national courts.