Opinion of Mr advocate general Mayras

Mr President,

Members of the Court,

I —. In December 1976 the Commission had informed the Council of its intention to extend the application of monetary compensatory amounts to certain products of the food industry in order to alleviate the effects of distortion of competition suffered by Irish industry as a result of disparities in the prices of the basic products incorporated in processed products which were not themselves subject to compensatory amounts, these disparities being due to the difference between the agricultural conversion rates (or green rates) and the rates prevailing on the exchange markets for the pound sterling and the Irish pound.

II —. The Commission expresses doubts about the admissibility of the Italian Government's application in so far as it seeks the annulment of Regulation No 800/77. However the substance of that regulation will inevitably have to be discussed because, on the one hand, the statement of the reasons on which Regulation No 2657/77 is based is inseparable from that on which Regulation No 800/77 is based and, on the other hand, the assessment of its validity forms the subject-matter of two of the references to this Court for a preliminary ruling (Case 95/78 and Case 157/78).

1. As regards the inclusion in the compensatory amounts system of products which are the subject of a specific arrangement under Article 235 of the Treaty, the Italian Government and the plaintiffs maintain that the Commission did not assess the risk, and even less establish the existence, of disturbances in trade in basic agricultural products (sugar, cereals and so on), but did so only in trade in non-agricultural processed products containing those basic products. They submit that the Commission's power to assess the existence of a risk of disturbances in trade can be exercised only at the level of basic agricultural products and not also at the level of processed products. The power to include processed products is expressly provided in Article 1 (2) of Regulation No 974/71 of the Council, but it can be used only if there is a risk of disturbances in trade in the basic products. Because of the small incidence of the agricultural component in the production costs, trade in the processed products in question (confectionery and so on) can in no way give rise to disturbances in trade in the basic agricultural products.

2. I now turn to the geographical scope of the contested regulations.

3. I now come to the scope of the compensatory amounts system in time.

Ill —. Before concluding, I should like to make some general observations about the monetary compensatory amounts system. Although that system is a handicap for certain countries with a currency floating downwards freely in relation to countries with strong currencies floating together, it is a form of protection even for certain countries in the former group against countries in the same group whose currency is still weaker. In fact, the mischief comes from the use of green rates differing from market rates. The remedy to the proliferation and permanence of compensatory amounts lies in an adjustment of the green currency; devaluation of that currency leads to a rise in the prices guaranteed to farmers and reduces the compensatory amounts, which operate as subsidy to exports from countries with a strong currency. However, even if such devaluation is desired by the State in question, it must also be accepted in Brussels by the other Member States, and it is understandable that it should meet lively opposition from States which have a strong currency.

I am of the opinion that the Court should:

1 Translated from the French.