Report for the Hearing delivered in Case 12/88

I — Facts and provisions at issue

A — Facts

Schäfer Shop BV, a private limited liability company whose registered office is at Arnhem and which is a subsidiary of a company incorporated under German law and established in the Federal Republic of Germany, applied to the competent authorities in the Kingdom of the Netherlands for authorization to import from the Federal Republic of Germany ballpoint pens, leather folders and various office items, of a total value of DM 40000, originating in the German Democratic Republic.

That application was refused by a decision of the Centrale Dienst In- en Uitvoer (Central Import and Export Office) of the Ministry of Economic Affairs.

The company appealed against that decision in an application lodged on 6 May 1986 with the College van Beroep voor het Bedrijfsleven, asking that court to annul the contested decision and to order the competent authorities to issue the requested authorization.

After considering the case in open court on 6 November 1987, the College van Beroep decided that the contested decision was based on rules adopted in the Netherlands pursuant to a policy laid down by the three Benelux States from 1975 onwards under which authorizations for the importation from the Federal Republic of Germany of goods originating in the German Democratic Republic are refused unless such refusal is incompatible with the interests of good administration, which in fact means that only goods of modest value and of a noncommercial kind are admitted.

The College van Beroep, doubtful as to whether such rules were compatible with Paragraph 3 of the Protocol on German internal trade, referred the matter to the Court under Article 177 of the EEC Treaty.

B — Legal background to the dispute

(a) The Protocol on German internal trade and connected problems

Paragraph 1 of the Protocol provides that trade between the German territories subject to the Basic Law of the Federal Republic of Germany and the German territories in which the Basic Law does not apply is a part of German internal trade. In view of the disadvantages which that provision may involve for the other Member States, Paragraph 2 provides that each Member State is to inform the other Member States and the Commission of any agreements relating to trade with the territories in question and to ensure that the implementation of such agreements does not conflict with the principles of the common market. In this regard, the State in question must in particular take appropriate measures to avoid harming the economies of the other Member States.

Finally, Paragraph 3 of the Protocol contains a safeguard clause worded as follows: Each Member State may take appropriate measures to prevent any difficulties arising for it from trade between another Member State and the German territories in which the Basic Law of the Federal Republic of Germany does not apply.

(b) The policy adopted by the Benelux States and the regulations applicable in the Netherlands

1. From 1975, the Benelux countries adopted a policy under which, in principle, no authorizations are granted for the importation from the Federal Republic of Germany of goods originating in the German Democratic Republic unless the goods are of limited value and of a noncommercial kind. That policy is embodied in a supplementary instruction of 30 June 1975 sent to the authorities in the Benelux countries responsible for issuing authorizations.

2. In the Netherlands, the importation of industrial products originating in the German Democratic Republic is subject to authorization under the Invoerbesluit landen 1981 (a 1981 regulation relating to imports from certain countries). It is true that the Vrijstellingsbeschikking niet-landbouwgoederen EG 1981 (a 1981 order exempting nonagricultural EEC goods from duty) provides for general exemptions from the requirement that an authorization must be obtained in the case of goods brought into free circulation in Community States.

The College van Beroep, doubtful as to whether those rules were compatible with the Protocol on German internal trade, referred the following preliminary question to the Court of Justice by a decision of 8 January 1988, lodged at the Court Registry on 14 January 1988:

In accordance with Article 20 of the Protocol on the Statute of the Court, written observation have been submitted by:

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.

II — Summary of the written observations submitted to the Court

The Kingdom of the Netherlands and the Kingdom of Belgium consider that the rules at issue are compatible with Paragraph 3 of the Protocol on German internal trade.

In this regard, it puts forward three considerations. First, it points out that the Tarifbesluit of 1960 (now repealed) provided for the application of Common Customs Tariff duties to goods imported from the German Democratic Republic via the Federal Republic of Germany, those duties being applied category by category in accordance with the difficulties prevailing in the relevant sectors of the economy.

That measure proved impossible to implement as a result of both the diversity of the products involved and the complete freedom of trade between the Netherlands, Belgium and Luxembourg. Secondly, it is pointed out that Paragraph 3 of the Protocol on German internal trade is a highly specific provision aimed at alleviating the consequences of the special relationship between the Federal Republic of Germany and the German Democratic Republic. That provision cannot, therefore, be compared to other derogating or safeguard clauses, such as Article 115 of the EEC Treaty; it rather enables States to take action to prevent any difficulties from arising as a result of trade between the Federal Republic of Germany and the German Democratic Republic, subject merely to the requirement that the measures taken are not to exceed whatever is necessary to achieve the aim in question.

It so happens that the system adopted whereby importation is, in principle, forbidden is the only measure suitable inasmuch as another selectively applied system has proved unable to protect the Benelux market adequately.

The Federal Republic of Germany and the Commission take a different view.

The word appropriate is to be interpreted in the light of the measures already taken by the Federal Republic, of which the Commission is kept informed. As the exception provided for in Paragraph 3 of the Protocol is to be interpreted strictly, the Commission considers that, given the actual situation as regards German internal trade, as described above, the measures adopted by the Benelux countries are disproportionate, a complete ban on importations being too severe.

Those measures are therefore incompatible with the Protocol.

In that regard, the Federal Republic of Germany emphasizes that Paragraph 3 of the Protocol differs from other safeguard clauses such as Article 115 of the Treaty. First of all, the difficulties referred to may be merely contingent, which means that preventive measures may be taken ; secondly, the paragraph does not provide for any Community control, which implies that States have a considerable degree of discretion. Therefore, any measures they adopt can only be challenged if they patently exceed that margin of discretion.

The Federal Republic is nevertheless of the opinion that such is the case with a complete ban on importation. It considers that, while States are not obliged to examine every single case of importation because the resulting administrative burden would be too great, it is enough if the general rules adopted cover groups of products or branches of the economy where there are difficulties, provided that the measures in question are temporary and are regularly reviewed.

In that connection, the Federal Republic points out that the judgment making the reference for a preliminary ruling does not provide sufficient information to answer the question whether difficulties of that sort exist as regards the categories of products concerned. That question must be determined by the national court alone.

III — Answers to questions put by the Court

1. In compliance with the Court's request, the Netherlands Government submitted the text of the policy adopted by the Benelux States in 1975 and the full text of the Invoerbesluit Landen 1981 and the Vrijstellingsbeschikking niet-landbouwgoederen EG 1981.

2. The Court asked the Commission to state:

1 Language of the case: Dutch.