Opinion of Mr Advocate General Reischl delivered on 24 February 1981. # Firma Anton Dürbeck v Hauptzollamt Frankfurt am Main-Flughafen. # Reference for a preliminary ruling: Hessisches Finanzgericht - Germany. # Community protective measures - Trade with non-member countries. # Case 112/80.

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The prices on the Community market of products exported from third countries and in particular their tendency to fall excessively,

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Quantities for which withdrawals are or may be effected.”

(a)

In Case 201/80 the plaintiffs have stressed that Article 29 of Regulation No 1035/72 has to be interpreted restrictively and that therefore measures based on that article must be subjected to a very critical examination. They have pointed out that a freeze on imports represents a derogation from Article 22 of Regulation No 1035/72 whereby the application to imports from non-member countries of any quantitative restrictions or measures having equivalent effect is prohibited. Moreover the function of the system embodied in Article 23 et seq. of Regulation No 1035/72, consisting in the fixing of reference and import prices and the levying of countervailing charges on imports, is in principle to avoid disturbances which might arise from the price level of products offered by non-member countries.

In principle it will not be possible to deny the validity of that argument. On the other hand, however, it must not be overlooked that the task with which the Commission is charged of determining whether there are serious disturbances, or a threat of them, and of determining their effects requires a wide margin of discretion since that task involves making economic forecasts of a necessarily complicated character and complicated economic measures are at issue. That was emphatically stated in the judgment of 7 February 1973 in Case 40/72 I. Schroeder KG v Federal Republic of Germany [1973] ECR 125, especially in paragraph 14, which concerned a similar set of facts involving protective measures against the importation of products processed from tomatoes.

(b)

The plaintiff in the main action alleges that the Commission regulations complained of made no reference to Regulation No 2707/72 which, as I have already said, determines the matters which must be taken into account in the determination of the question whether the situation referred to in Article 29 of Regulation No 1035/72 exists. The plaintiff regards that as a defect of form which must necessarily mean that the Commission regulations are invalid since there must be some doubt whether the Commission had regard to the provisions of Regulation No 2707/72. At any rate, in this way, it is claimed, information which those concerned needed for the protection of their rights was withheld from them.

I should like to say in reply to that point that Regulation No 1035/72, to which the recitals in the preamble to the Commission regulations make express reference, is to be regarded as their prime legal basis. Furthermore the economic considerations mentioned in the preambles to the regulations are not the only indication that the Commission had due regard to Regulation No 2707/72; further information on this matter was also provided in the proceedings so that the assumption that the plaintiff was handicapped in the protection of its rights, which seems improbable even according to the plaintiff's own written submissions, can undoubtedly be ruled out.

Therefore there is really no ground for describing the deficiency referred to as a major formal defect necessarily making the measures adopted invalid.

(c)

The plaintiffs in Case 201/80 have made the further criticism that the preambles to the Commission regulations say nothing about the prices of products from non-member countries and a downward trend in prices although that aspect is mentioned in Regulation No 2707/72 as a factor to be taken into account. They have further objected that the preamble to Regulation No 687/79 mentions only the impending risk of extensive withdrawals and that imports from non-member countries might theoretically increase the quantities to be withdrawn from the market. They agree that that does seem sufficient for the purposes of Regulation No 2707/72, Article 1 (d) of which refers to “quantities for which withdrawals are or may be effected”. However, under Article 29 of Regulation No 1035/72 measures against non-member countries in connexion with withdrawals from the market are only possible if withdrawal or buying-in operations have actually taken place and concern significant quantities. On that basis, therefore, it is claimed, the assumption must be — if the compatibility of Regulation No 2707/72 with Regulation No 1035/72 is not to be in doubt — that the criterion mentioned from Regulation No 2707/72 must be understood as requiring at least a present possibility that withdrawals may be effected and not only a future risk which the preamble to the Community regulation refers to.

It should be remembered that under the system of Regulation No 1035/72 (see Article 23 et seq.) the Commission is to be kept constantly informed about prices recorded in non-member countries. There can therefore be no question that it did not take note of those factors and their trends. If they were not referred to in the preamble to the regulation however, the explanation is that imports from non-member countries and their trend in the spring of 1979 together with the price level in the Community, which was already very low anyway, were a problem less of prices than of quantities for the Commission; it was afraid of disturbances on the market not so much in the form of a further decline in domestic prices as in the form of a drop in sales and the concomitant extension of intervention measures. This case is therefore reminiscent of Joined Cases 41 to 44/70 NV International Fruit Company and Others v Commission [1971] ECR 411, judgment of 13 May 1971, in which it was not so much the prices of the imported products which counted in the assessment of the measures to protect the apple market; rather it was considered sufficient that increased imports, which were bound to attract demand, created the risk of increased intervention.

Secondly, there can in my view be no question of a failure to observe the second indent of Article 29 (1) of Regulation No 1035/72 or of a wrong application of the second indent of Article 1 (d) of Regulation No 2707/72. Article 29 of Regulation No 1035/72 envisages two cases in which appropriate measures may be applied in trade with non-member countries. The first occurs if by reason of imports or exports the Community market in one or more of the products referred to in Article 1 experiences or is threatened with serious disturbances; the second case exists if the withdrawal or buying-in operations effected pursuant to Articles 18 and 19 in relation to the products listed in Annex III a concern significant quantities — and there is obviously no need here to prove that imports are actually the cause of the disturbance. However, in the first case, with which we are concerned here, it is also specified in a Council regulation, that is in a measure of equal status, that in order to determine whether such a situation exists account is to be taken of the quantities for which withdrawals are or may be effected. So it is clear, without there being any question of a break in the logic of the system or any incompatibility of Regulation No 2707/72 with Regulation No 1035/72, that the fear that intervention measures might be adopted is sufficient in this regard, not just in the form of a present possibility but also of a future risk.

Moreover it should not be forgotten that very considerable withdrawals from the market had in fact already taken place in March 1979. That must be the decisive factor rather than the fact that it was not mentioned in the preamble to the regulation but only brought up during the proceedings, ror surely it is scarcely possible to require a detailed and comprehensive survey of the economic situation to be given in the preamble to a regulation in order to escape the charge of a deficiency in the statement of reasons.

(a)

In view of what we have learned in the proceedings it can hardly be denied that the common market in dessert apples was in a really difficult situation in spring 1979.

As proof of that, the figures on the size of the harvest in the marketing year 1978/79 (6676000 tonnes) and the comparison with previous harvests (1975/76: 7551000 tonnes; 1976/77: 6497000 tonnes; 1977/78: 5122000 tonnes) are certainly not sufficient. For, as the plaintiff has correctly pointed out, only marketable goods, that is to say goods meeting the quality standards of the common organization of the market, are relevant to the market and in its appraisal. However, the Commission could not adduce any figures, just as the plaintiff's argument that only less than one-third of the 1978/79 harvest met the quality standards was not proved.

Other facts, however, are of crucial importance.

All those circumstances undoubtedly lead to the conclusion that in the spring of 1979 there existed an extraordinarily critical situation on the common market in dessert apples.

(b)

That conclusion gives rise to the question whether the volume of imports to be expected might lead to an appreciable deterioration of the situation and whether the import reductions envisaged by the Commission to avert that threat seem appropriate.

The plaintiff has basically objected that a negative answer to that question is inescapable because, owing to the kinds, qualities and prices in question, imported and home-produced apples may be viewed as interchangeable only to a limited extent and because all previous experience shows that in the spring and early summer it must even be expected that imported apples will promote the sale of domestic produce and have a beneficial effect on the price situation. That contention, however, is difficult to accept. It is hard to imagine that, in a situation characterized by great difficulties in disposing of domestic produce and by falling prices on the common market, consumers who are no longer attracted by domestic produce should be prepared, when freshly-harvested apples are imported, to buy not only those apples but stored domestic produce, too, and at a higher price. As far as the question of inter-changeability is concerned reference may be made not only to the affirmative finding by the special GATT group which had to deal with Chile's complaint and about which the Commission informed the Court. The case-law on this subject (judgment in Joined Cases 41 to 44/70 [1971] ECR 411 et seq., especially paragraphs 47 to 54) is quite plain as well. I need only recall two observations made in that judgment:

“Yet, irrespective of the prices of these products there is still a danger that because they can be substituted for domestic products they may attract paa of the internal demand and thus cause even greater quantities to flow in to the intervention agencies.”

“It is true that the products coming from third countries during this period” (spring) “were manifestly superior both as to quality and price to the domestic products, but on the other hand the quality of the latter products was not so inferior that interchange of the two categories was in no circumstances possible.”

If that approach is adopted in this case, too, it must be remembered that according to the Commission's inquiries the imports envisaged would have amounted to 380000 tonnes. That would have represented an increase even as against the previous year in which there had been a particularly small domestic harvest; it would have been a very considerable increase in comparison with imports in 1977 (249000 tonnes), a year in which the harvest was of comparable size. What is more, imports had never reached that magnitude in any other previous year. It is therefore difficult to criticize the Commission for believing that such a volume of imports would create the risk of a disturbance, and in view of the situation described there can be no question of an error of judgment if the Commission was attempting to achieve a reduction of imports to roughly 310000 tonnes. We should not therefore accept the plaintiff's view that the only issue was whether an additional quantity of 8000 tonnes of apples to be imported from Chile would have created the risk of a disturbance. Quite irrespective of the fact that at the time when the disputed measures were adopted there was still no reliable information about contracts of carriage for some 5000 tonnes and that it could not be assumed, either, that Chile would restrict itself to 55000 tonnes (because no agreement on that compromise figure had been reached), the risk of a disturbance must more correctly be seen to exist in an additional volume of imports comprising some 70000 tonnes altogether.

The curtailment of imports which the Commission consequently believed to be correct, and properly so in my view, was, as we know, achieved in relation to other exporting countries on the basis of voluntary restriction agreements. The plaintiff may be critical of that course of action and doubt its legality but consideration of that issue may in my opinion remain open since the voluntary restriction agreements did not constitute a legal pre-condition in the sense of being a legal basis for the protective measures adopted against Chile. The only important point is that those steps were in fact effective; they did reduce the risk of a disturbance so that it was possible for the adoption of unilateral protective measures to be restricted to Chile. A decision not to adopt protective measures against Chile would on the other hand have run the risk that the other exporting countries would not have kept to their voluntary restriction agreements so that it would have been necessary to provide for an actual increase in imports of not just some 8000 tonnes but, as the Commission feared, of some 70000 tonnes.

As regards the further issue of the fair, proportionate reduction of all the exports envisaged, I see no reason for criticism here either. The Commission's approach was to take as a basis the average imports during the three previous years, although in the case of 1976 when, unlike other countries, Chile clearly did not keep to a voluntary restriction agreement, agreed imports and not actual imports were taken into account. A specific percentage reduction was then made. As the Commission told us, using that method it arrived at the lowest percentage reduction in the case of Chile so that there cannot basically be any question of that country's being put at a disadvantage.

When the plaintiff says however that there was reason to give Chile a greater proportion of the volume of imports envisaged in view of the fact that Chile did not start exporting until a late stage and the fact that in spring 1979 it was to be expected that the exporting countries who had signed voluntary restriction agreements would not exhaust the quotas provided, I would beg to differ. I cannot in fact discern the considerations which would have provided compelling reasons for so proceeding. Secondly, in my view it does not seem permissible to draw inferences with regard to the year which concerns us here from the conduct of certain States in the southern hemisphere (Argentina, Australia, New Zealand) in the marketing year 1979/80 when obviously greater amounts were announced for import than were actually imported. The only important point is simply that, according to the unchallenged statements of the Commission, in 1979 the quotas specified in the voluntary restriction agreements were actually used up and the plaintiff has not been able to demonstrate that this occurred — by means of additional purchases from other countries — merely out of fear that during negotiations for future voluntary restriction agreements the Community might otherwise rely on the fact that the 1979 quotas had not been exhausted.

c)

If, therefore, the foregoing considerations can leave no doubt as to the justification of the protective measure adopted by the Commission and if there can, in particular, be no question of the Commission regulations being invalid on the grounds of inadequate examination or erroneous appraisal of the facts with respect to Article 29 of Regulation No 1035/72 and Regulation No 2707/72, that result is not affected by two further arguments partly stemming from the actions for damages.

One of those arguments concerns the fact that Commission Regulation No 687/79 was amended twice. That fact really does not lead to the conclusion that the measure complained of is invalid for having been enacted on the basis of inadequate information. There was no such uncertainty as far as the appraisal of the situation on the domestic market and the volume of imports to be expected is concerned. That may have been the case as far as concerns details about the arrival of the goods in the Community, for which the Commission was dependent on information from Chile. When this information became available, however, there was no alternative in view of the principle of proportionality clearly expressed in Article 3 of Regulation No 2707/72 but to adjust the measure originally adopted to meet the changed circumstances.

The other argument rests on a comparison with 1979/80 and the fact that in that year, despite an apple harvest of 6869000 tonnes and withdrawals from the market totalling 480186 tonnes, protective measures were not taken against imports which reached a volume of 370000 tonnes. To draw conclusions from that comparison about the correctness of the exercise of discretion in spring 1979 and the legality of the measures based thereon seems to me to be misguided because for one thing the conduct of the Community institutions in 1980 might also have been affected by the proceedings pending under GATT which might possibly have occasioned special restraint; it should not be overlooked either that the position in 1980 was more favourable than in 1979 in so far as a rise in prices was recorded in February and March and basic prices were exceeded in the countries with the largest stocks (see the statement of Commissioner Gundelach, Official Journal C 190 of 28 July 1980, p. 12). Moreover sale prices of the exporting countries were clearly higher than in the previous year and, in comparison with the actual imports in the previous year, it was possible to speak of only a moderate increase in imports.