THE SUBSTANCE OF THE CASE
1 BY AN ORDER DATED 12 MARCH 1969 RECEIVED AT THE COURT REGISTRY ON 21 MARCH 1969, THE FINANZGERICHT, HAMBURG, IN ACCORDANCE WITH ARTICLE 177 OF THE TREATY ESTABLISHING THE EEC, SUBMITTED A QUESTION ON THE INTERPRETATION OF THE FIRST PARAGRAPH OF ARTICLE 16 OF REGULATION NO 160/66/EEC OF THE COUNCIL LAYING DOWN THE TRADE ARRANGEMENTS APPLICABLE TO CERTAIN GOODS RESULTING FROM THE PROCESSING OF AGRICULTURAL PRODUCTS . BY THIS QUESTION THE COURT IS ASKED TO RULE ON THE QUESTION WHETHER " BY CUSTOMS DUTY BOUND UNDER GATT WITHIN THE MEANING ( OF THE SAID ) FIRST PARAGRAPH OF ARTICLE 16,...THERE MUST BE UNDERSTOOD SOLELY THE DUTY OF 27 PER CENT APPLICABLE TO THE PRODUCTS UNDER TARIFF HEADING 17.04-C AND 18.06-B IN ANNEX B ( SCHEDULE XL ) TO THE PROTOCOL TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE EMBODYING THE RESULTS OF THE 1960-61 TARIFF CONFERENCE " - HEREINAFTER REFERRED TO AS THE " GATT PROTOCOL " - " OR DOES THAT CONCEPT ALSO INCLUDE, IN ADDITION TO SUCH CUSTOMS DUTY, THE ADDITIONAL DUTY WHICH, IN ACCORDANCE WITH FOOTNOTE ( A ) TO THE TARIFF HEADING, MAY BE LEVIED ON THE SUGAR CONTAINED IN THE PRODUCT ".
2 ACCORDING TO THE WORDING OF THE SAID FIRST PARAGRAPH OF ARTICLE 16, " IF UPON THE ENTRY INTO FORCE OF THIS REGULATION THE CUSTOMS DUTY APPLICABLE TO GOODS TO WHICH IT APPLIES IS BOUND UNDER GATT,...THE TOTAL AMOUNT OF THE TAX MENTIONED IN ARTICLE 10 " OF THE SAME REGULATION - THAT IS TO SAY, OF THE DUTY IMPOSED ON THE IMPORTATION OF GOODS TO WHICH THE REGULATION APPLIES FROM THIRD COUNTRIES INTO A MEMBER STATE -, " EXPRESSED AS A PERCENTAGE OF THE IMPORT PRICE OF THE GOODS IN QUESTION, MAY NOT EXCEED THE RATE OF THE CONSOLIDATED COMMON CUSTOMS TARIFF DUTY IN RELATION TO THIRD COUNTRIES ".
3 ACCORDING TO THE WORDING OF SCHEDULE XL IN ANNEX B TO THE GATT PROTOCOL, A RATE OF 27 PER CENT IS IMPOSED IN RESPECT OF TARIFF HEADING 17.04 FOR " SUGAR CONFECTIONERY, NOT CONTAINING COCOA...C OTHER " AND TARIFF HEADING 18.06 FOR " CHOCOLATE AND OTHER FOOD PREPARATIONS CONTAINING COCOA " SUBJECT TO FOOTNOTE ( A ) CONCERNING AN ADDITIONAL DUTY ON SUGAR . THIS FOOTNOTE PROVIDES THAT " THE COMMUNITY RESERVES THE RIGHT TO LEVY, IN ADDITION TO THE BOUND DUTY, AN ADDITIONAL DUTY ON SUGAR, CORRESPONDING TO THE CHARGE BORNE BY SUGAR ON IMPORTATION, AND APPLICABLE TO THE QUANTITY OF VARIOUS SUGAR ( CALCULATED IN SUCROSE ) CONTAINED IN THESE PRODUCTS ".
4 THE QUESTION RAISED SEEKS THEREFORE TO ASCERTAIN WHETHER THE MAXIMUM RATE WHICH, ACCORDING TO ARTICLE 16, THE DISPUTED CHARGE MAY NOT EXCEED CONSISTS OF THE DUTY OF 27 PER CENT LAID DOWN IN THE GATT PROTOCOL OR THE TOTAL OF THAT DUTY AND THE " ADDITIONAL DUTY ON SUGAR " REFERRED TO IN FOOTNOTE ( A ).
5 IT HAS BEEN CONTENDED THAT THE AFOREMENTIONED PROVISIONS OF THE GATT PROTOCOL DISTINGUISH BETWEEN THE " BOUND DUTY " - A CONCEPT WHICH WOULD RELATE SOLELY TO THE RATE OF 27 PER CENT - ON THE ONE HAND, AND THE " ADDITIONAL DUTY ON SUGAR ON THE OTHER .
6 MOREOVER, THE COMMUNITY PROVISIONS APPLICABLE HAVE NOT DEFINED THE EXPRESSIONS " BINDING " AND " BOUND DUTY " ANY MORE THAN DID THOSE OF GATT . IT IS COMMON GROUND THAT THESE EXPRESSIONS ARE FREQUENTLY USED IN A WIDE SENSE TO COVER ALL THE TARIFF CONCESSIONS MADE BY THE MEMBERS OF GATT AND TO FORM THE SUBJECT OF AN OBLIGATION WITHIN THE FRAMEWORK OF THAT AGREEMENT . ACCORDINGLY, THE ANSWER TO THE QUESTION RAISED MUST BE DEDUCED PRIMARILY FROM THE REASONS FOR AND AIMS OF REGULATION NO 160/66/EEC .
7 UNDER THE TERMS OF ARTICLE 2, THIS REGULATION APPLIES NOT ONLY TO THE PRODUCTS WHICH ARE THE SUBJECT OF THE MAIN PROCEEDINGS, BUT TO ALL THE GOODS LISTED IN THE ANNEX THERETO .
7 UNDER THE TERMS OF ARTICLE 2, THIS REGULATION APPLIES NOT ONLY TO THE PRODUCTS WHICH ARE THE SUBJECT OF THE MAIN PROCEEDINGS, BUT TO ALL THE GOODS LISTED IN THE ANNEX THERETO .
UNDER ARTICLE 10 OF THIS REGULATION, THE CHARGE WHICH IT INTRODUCES IS COMPOSED, ON THE ONE HAND, " OF A FIXED COMPONENT CONSISTING OF AN AD VALOREM CUSTOMS DUTY...INTENDED TO PROTECT THE INDUSTRY PRODUCING THE GOODS IN QUESTION " AND, ON THE OTHER HAND, OF " A VARIABLE COMPONENT...INTENDED TO REFLECT, FOR THE QUANTITIES OF BASIC PRODUCTS ( CONTAINED IN THOSE GOODS)...THE DIFFERENCE BETWEEN THE PRICES OF THOSE PRODUCTS IN THE IMPORTING MEMBER STATE...AND THE PRICES OF IMPORTS FROM THIRD COUNTRIES...WHEN THE TOTAL COST OF THOSE QUANTITIES OF BASIC PRODUCTS IS HIGHER IN THE IMPORTING MEMBER STATES ".
8 ACCORDING TO THE SEVENTH RECITAL OF THE PREAMBLE TO THE REGULATION IN QUESTION " THE INTRODUCTION OF THE SYSTEM OF AGRICULTURAL LEVIES FOR RAW MATERIALS USED HAS ALTERED THE PREVIOUSLY ESTABLISHED RELATIONSHIPS BETWEEN THE PROTECTION ASSURED TO THIRD COUNTRIES IN RESPECT OF THE PRODUCTION OF THE AGRICULTURAL PRODUCTS IN QUESTION AND OF THE GOODS RESULTING FROM THEIR PROCESSING; WHEREAS THIS CHANGE RESULTS IN CERTAIN CASES IN A CONSIDERABLE REDUCTION IN THE ADVANTAGES WHICH THE INDUSTRIES OF THE MEMBER STATES PRODUCING THESE GOODS ENJOYED IN THE COMMUNITY ". THE EIGHTH RECITAL OF THE SAME PREAMBLE STATES : " WHEREAS THE SITUATION THUS CREATED AND THE ABOVEMENTIONED DIFFICULTIES MAY BE OVERCOME BY THE INTRODUCTION OF COMMUNITY TRADE ARRANGEMENTS DIRECTED, ON THE ONE HAND, TO BRINGING THE PRICES OF AGRICULTURAL PRODUCTS IMPORTED INTO EACH MEMBER STATE IN THE FORM OF THE GOODS IN QUESTION TO THE LEVEL OF THOSE RULING ON THE DOMESTIC MARKET, AND ON THE OTHER HAND, TO GUARANTEEING PROTECTION FOR THE INDUSTRIES PRODUCING THOSE GOODS ".
9 TAKEN AS A WHOLE, THESE FACTORS INDICATE ANXIETY TO ENSURE EFFECTIVE PROTECTION FOR THE PROCESSING INDUSTRIES OF THE MEMBER STATES AGAINST THE IMPORTATION OF COMPETING GOODS FROM THIRD COUNTRIES, IN SO FAR AS THE INDUSTRIES OF THOSE COUNTRIES ARE ABLE TO OBTAIN THE BASIC AGRICULTURAL PRODUCTS AS PRICES MORE ADVANTAGEOUS THAN THOSE RULING IN THE MEMBER STATES FOR THE SAME AGRICULTURAL PRODUCTS .
THE " VARIABLE " PART OF THE CHARGE PROVIDED FOR BY ARTICLE 10 ABOVEMENTIONED MEETS THIS REQUIREMENT PRECISELY . ON THE OTHER HAND, THE DIVISION OF THE CHARGE INTRODUCED BY THIS PROVISION INTO A " FIXED COMPONENT " AND A " VARIABLE COMPONENT " INDICATES A CLEAR PARALLEL WITH THE DISTINCTION RESULTING FROM THE PROVISION OF THE GATT PROTOCOL IN QUESTION .
10 IT MUST THEREFORE BE ASSUMED THAT THE AUTHORS OF THE FIRST PARAGRAPH OF ARTICLE 16 INTENDED TO UTILIZE EXHAUSTIVELY THE RIGHTS WHICH THE COMMUNITY HAD RESERVED AS AGAINST OTHER MEMBERS OF GATT UNDER THE WORDING OF THE ABOVEMENTIONED FOOTNOTE ( A ) TO SCHEDULE XL OF ANNEX B TO THE GATT PROTOCOL .
11 THIS SOLUTION IS CONFIRMED BY THE PENULTIMATE RECITAL OF THE PREAMBLE TO THE SAID REGULATION ACCORDING TO WHICH " THE TOTAL AMOUNT OF THE TAXATION APPLICABLE IN RESPECT OF THIRD COUNTRIES, EXPRESSED AS A PERCENTAGE OF THE IMPORT PRICE OF THE GOODS IN QUESTION, MAY NOT EXCEED THE RATE OF THE CUSTOMS DUTIES RESULTING FROM ANY UNDERTAKINGS ENTERED INTO IN RESPECT OF THE SAID COUNTRIES ". IN FACT THIS, TOGETHER WITH THE FOLLOWING SENTENCE IN THE SAME RECITAL WHEREBY " THE TOTAL AMOUNT OF THE TAXATION APPLICABLE IN INTRA-COMMUNITY TRADE...MUST, HOWEVER, REMAIN LOWER THAN THE RATE OF THE ABOVEMENTIONED CUSTOMS DUTIES ", PERMITS THE CONVERSE CONCLUSION THAT IN EXTRA - COMMUNITY TRADE THE AUTHORS OF THE REGULATION DID NOT INTEND TO RENOUNCE, EVEN PARTIALLY, THE POWERS GRANTED TO THEM BY VIRTUE OF FOOTNOTE ( A ) TO THE PROVISIONS OF THE GATT PROTOCOL IN QUESTION .
12 IN ALL THESE CIRCUMSTANCES THE FIRST PARAGRAPH OF ARTICLE 16 OF REGULATION NO 160/66/EEC APPEARS SUFFICIENTLY CLEAR, DESPITE THE LACK OF PRECISION OF ITS WORDING, TO PERMIT A NEGATIVE REPLY TO THE FIRST PART AND AN AFFIRMATIVE REPLY TO THE SECOND PART OF THE QUESTION PUT BY THE FINANZGERICHT .
13/14 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE AND AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, A STEP IN THE ACTION PENDING BEFORE THE FINANZGERICHT, HAMBURG, THE DECISION ON COSTS IS A MATTER FOR THAT COURT;
THE COURT
IN ANSWER TO THE QUESTION REFERRED TO IT BY THE FINANZGERICHT, HAMBURG, BY ORDER OF THAT COURT OF 12 MARCH 1969, HEREBY RULES :
BY " CUSTOMS DUTY...BOUND UNDER GATT " AND IN RESPECT OF TARIFF HEADINGS 17.04-C AND 18.06-B APPEARING IN SCHEDULE XL OF ANNEX B TO THE PROTOCOL TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE EMBODYING THE RESULTS OF THE TARIFF CONFERENCE OF 1960-1961, THE FIRST PARAGRAPH OF ARTICLE 16 OF REGULATION NO 160/66/EEC OF THE COUNCIL INCLUDES NOT ONLY THE 27 PER CENT DUTY PROVIDED FOR BY THE ABOVEMENTIONED PROVISIONS OF THAT PROTOCOL, BUT ALSO THE " ADDITIONAL DUTY ON SUGAR " MENTIONED IN FOOTNOTE ( A ) TO THE SAID HEADINGS .
