Opinion of Mr advocate general Capotorti
Mr President,
Members of the Court,
This case affords a further demonstration of the number of complications and unexpected consequences which the system of monetary compensatory amounts may produce. Thanks to that system, and because they have taken advantage of the export licence for sugar in excess of the maximum quota (for which the Community had not intended to take any responsibility) certain producers of these goods have derived considerable benefit from the fluctuations in the currencies of certain Member States and burdened the Community intervention machinery with consequent financial charges.
Under Regulation (EEC) No 3330/74 of the Council of 19 December 1974 which re-cast the basic provisions on the common organization of the market in sugar, each sugar-producing undertaking is alloted a basic quota, called Quota A (Article 24), which consists of a quantity which the undertaking concerned can sell direct on the Community market with the advantage of the intervention price. Apart from this sugar producers can place freely on the market in the Community an additional portion of their output which lies between the basic quota and a maximum quota which is calculated by multiplying the basic quota by a coefficient and which is called Quota B (Article 25). However, before marketing sugar under Quota B producers must pay a levy (Article 27 (1)). Finally, sugar produced outside the maximum quota, called C sugar, may not be disposed of within the Common Market but must be exported to the world market by 31 December following the marketing year during which it was produced (Article 26), without any entitlement to refund or any other form of aid. Exportation is effected on the basis of the relevant licence which is issued to producers and is valid throughout the Community. Under Article 5 (3) of Commission Regulation (EEC) No 2990/76 of 9 December 1976 (on special detailed rules for the application of the system of import and export licences for sugar) the period of validity of this type of licence is limited.
From the entry into force of Regulation (EEC) No 2645/70 of the Commission of 28 December 1970 until the adoption by the Commission of Regulation (EEC) No 458/73 of the Commission of 2 February 1973 producers of Quota C sugar could obtain release from the obligation imposed upon them to dispose of such sugar outside the Common Market only by exporting sugar produced by themselves. Believing that this requirement that sugar for export and sugar produced should be the same had proved too burdensome for some sugar producers the Commission, in Regulation (EEC) No 458/73, referred to above, made it possible for sugar C manufacturers to release themselves from the said obligation by exporting sugar produced by other undertakings. In order to understand this provision it suffices to bear in mind that, for example, anyone who had produced sugar in excess of the maximum quota might wish to export instead of his own sugar that produced by an undertaking situated in an area nearer to the port of embarkation so as to avoid the complication, expense and loss of time involved in transporting his own sugar. Manufacturers who took advantage of this right had to make a standard payment to offset the benefit derived from the substitution; the sum to be paid was fixed at two u.a. per 100 kg of sugar.
Meanwhile, in 1971 (to be precise, in Regulation (EEC) No 974/71 of the Council of 12 May 1971), the Community had set up the system of monetary compensatory amounts which was designed to make possible, despite the fluctuations of the exchange rates between the currencies of the Member States, the artificial maintenance of the parity of these currencies with the Community unit of account so as to avoid the fluctuations' being automatically reflected in the price levels of agricultural products in trade between those States. Under that system, which was defined in Regulation (EEC) No 2746/72 of the Council of 19 December 1972, the countries whose money has been devalued or is depreciating grant compensatory amounts on imports and levy the same amounts on exports. On the other hand countries whose currency has been revalued or is appreciating levy compensatory amounts on imports and grant them on exports. This device has made it possible to freeze the prices of agricultural products expressed in national currencies in such a way that the producer in each country continues to charge the same figure, expressed in the national currency of his country, which he charged prior to devaluation or revaluation. The result of this has nevertheless been that while intervention prices have been maintained throughout the Community at one and the same level expressed in units of account, in terms of national currencies the actual price levels have been substantially different because they are tied to the exchange rates prevailing before revaluation or devaluation. Thus, for example, the intervention price for sugar on 20 January 1977, expressed in units of account, was 33.14 u.a. throughout the Community. On the other hand, thanks to the operation of the national parities, which the compensatory amounts helped to maintain, in Germany this .amount became 49.63 dollars and, in France, 37.83 dollars.
Among the anomalous effects of the system of monetary compensatory amounts, which, because of its exceptional character, was originally conceived as a wholly provisional one, was one which benefited undertakings producing sugar in excess of the maximum quota in hard-currency countries (for example, the Federal Republic of Germany). Such undertakings could make good profits by availing themselves of the right granted by Regulation (EEC) No 458/73 of the Commission to release themselves from the obligation to dispose of C sugar outside the Community by transferring the relevant export licence to a manufacturer in a Member State with soft currency, (France, for example), who effected the exportation of an equivalent quantity of sugar produced by it within the maximum quota. After fulfilling in this way his obligation to export sugar produced in excess of the maximum quota, the producer belonging to the hard-currency country was able to sell the sugar as though it formed part of his quota. In the case of sale on the Community market, he obtained the benefit of the Community intervention prices which, in terms of real value, are higher in Germany than in France; in the case of export, he also gained thanks to the grant of the monetary compensatory amount. It must be emphasized that, as the Commission pointed out, the economic result of this transaction is the same as if it were a case of an importation into Germany free of any monetary compensatory amount of a quantity of French Quota A or B sugar equal to the original German quantity of C sugar.
The not insignificant advantage which those producing sugar in excess of the maximum quota in hard-currency States could obtain from this transaction of substitution with Quota A or B sugar from soft-currencies at first escaped the notice of the Commission but it was certainly not missed by the sugar-producing undertakings of the Federal Republic of Germany. Half-way through the 1976/1977 marketing year two-thirds of German sugar produced in excess of the maximum quota had already been the subject of substitution operations under the provisions of the regulation quoted.
2. Rather late in the day the Commission became aware of what was happening and decided to remedy the situation by adopting, on 19 January 1977, Regulation (EEC) No 101/77, in which it amended the previous regulation, No 572/76 of 15 March 1976, which fixed inter alia monetary compensatory amounts for sugar. In the second recital in the preamble to the new regulation, the Commission stated that the exportation of sugar produced in excess of the maximum quota of the undertaking might give rise to deflections of trade since it may be replaced in intra-Community trade by sugar which has been produced within the limits of the quota and is thus subject to the application of compensatory amounts and that an operator who engages in such deflections benefits therefrom unfairly. In order to prevent such practices, the Commission provided that compensatory amounts should be applied to such sugar where it was exported from a Member Sute other than that in which it was produced and that such application should be restricted to cases where a compensatory amount was levied on exportation.
3. I come now to the facts of the case. On 27 June 1977, pursuant to Regulation (EEC) No 101/77, the French authorities levied compensatory amounts on 800 tonnes of sugar produced by the French undertaking Bauche within the maximum quota assigned to it and exponed on the basis of a C sugar licence granted by the German company Töpfer to the English company Man by contraa of 6 January 1977. The original text of that contract, which was drawn up in English, states that its object was an export licence for 800 tonnes of EEC white crystal sugar produced by Töpfer in excess of its maximum quota under Article 26 of Regulation (EEC) No 3330/74. Man accepted the obligation to export an equivalent quantity of sugar before 30 June 1977 in accordance with the Community regulations in force at the time of customs clearance so as to release Töpfer from the obligation to dispose of the C sugar produced by it outside the Community. As there would be no export refund on the sugar under a C licence, Töpfer undertook to pay to Man DM 42.50 per 100 kg of sugar exported. According to calculations made by Counsel for the undertakings concerned during the oral procedure in this case this figure was slightly lower than the amount of the export refund applicable at that time to exports of A or B sugar from France, after deduction of the compensatory amount. The net amount of the refund would in fact have been DM 42.75. Counsel for the undertakings concerned stated that Man had decided to obtain the C sugar export licence from Töpfer merely because it would have been inconvenient for it to wait the five or six days necessary to find some other means of exporting sugar from France.
4. Before the Tribunal d'Instance, Valenciennes, Bauche, the producing company, the Société Delquignies, the customs agent responsible for the export transaction, and Man, the English buyer, contested the legality of the imposition by the French customs of the compensatory amount on the aforesaid 800 tonnes, amounting to FF 241920 and sought an order that the Administration Française des Douanes, in its capacity as agent of the Commission of the European Communities, should repay them the above sum with interest.
5. Solution of the issues in the first group requires Regulation (EEC) No 101/77 to be considered in relation to the Community provisions which preceded it and especially in the light of the rules laid down by the regulations of the Council, to which the Commission's exercise of its power to make regulations is, of course, subject.
6. I come now to the second argument advanced by the undertakings concerned, which is that Regulation (EEC) No 101/77 unlawfully amended Regulation (EEC) No 3330/74 of the Council on the common organization of the market in sugar. From the observations which the plaintiff companies submitted in the course of these proceedings it would appear that the basis of this contention is to be found in Article 26 (1) of Regulation (EEC) No 3330/74, which lays down that sugar in excess of the maximum quota for any undertaking may not be sold on the internal market but must be exported. According to the companies, this means that Regulation 3330 had taken C sugar out of the field of application of any Community intervention machinery and in consequence of that of compensatory amounts; thus, it is claimed, by introducing the imposition of these amounts, Regulation (EEC) No 101/77 of the Commission amended that regulation of the Council without authority.
7. The contention still to be considered is that it was not possible to adopt Regulation (EEC) No 101/77 without first repealing Regulation (EEC) No 458/73. On the one hand, attention is drawn to the alleged incompatibility between the legislation introduced in 1973 and that adopted in 1977: the object of Regulation No 458 was to make it possible to expon sugar in excess of the maximum quota which was not produced by the manufacturer who exponed it, whereas Regulation No 101 was designed to prevent substitution transactions. On the other hand, Regulation No 458 had already imposed on undertakings involved in such transactions a standard payment to offset the benefits of the substitution while Regulation No 101, which denied that this offsetting was comprehensive, imposed an additional burden by levying the monetary compensatory amount.
8. In its sixth question, the French court asks whether the adoption in the course of a sugar marketing year of new rules having immediate application to transactions in progress made such rules retroactive, which would have involved a breach of the principle of legal certainty.
9. The final question referred to the Court by the Tribunal d'Instance of Valenciennes raises an issue concerning the protection of legitimate expectation. The French court asks whether Regulation No 101/77 is applicable to anyone who has, before its entry into force, assumed a contractual obligation to purchase C Quota sugar or to become an assignee of C Quota licences.
10. For all the foregoing considerations I conclude by recommending the Court to reply to the questions submitted by the Tribunal d'Instance, Valenciennes, for a preliminary ruling by declaring that Regulation (EEC) No 101/77 of the Commission did not amend Regulation (EEC) No 3330/74 of the Council; that the Commission was lawfully in a position to adopt that measure on the basis of Regulation (EEC) No 974/71 of the Council whilst maintaining in force all the provisions of Regulation (EEC) No 458/73 of the Commission; further that the adoption and application of Regulation (EEC) No 101/77 during the marketing year did not make it retroactive; and, finally, that that latter measure does not conflict with the principle of the protection of legitimate expectation owing to its being applicable also to export effected on the basis of contracts concluded prior to its entry into force for which the appropriate licence had not yet been obtained.
1 Translated from the Italian.